Microsoft to resume hiring with focus on AI after major layoffs, says Satya Nadella

After multiple rounds of layoffs, Microsoft plans to grow its workforce again with a focus on artificial intelligence. CEO Satya Nadella said the company will pursue “targeted scaling,” using AI to enhance productivity and empower smaller team

New Delhi: After a year of major layoffs, Microsoft is preparing to grow its workforce again — but this time with a clear focus on artificial intelligence (AI). Speaking on the BG2 podcast with investor Brad Gerstner, Microsoft CEO Satya Nadella said the company’s employee count will increase in a “smarter and more leveraged” way, driven by AI technology.

“We will grow our headcount,” Nadella said, adding that future hiring will be shaped by how AI boosts productivity across the company. Microsoft had about 2.28 lakh employees at the end of June 2025, with the number staying almost unchanged after several rounds of job cuts that affected over 15,000 workers.

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In contrast, before the AI boom in 2022, the company’s workforce had expanded by 22 per cent. The hiring slowdown came as Microsoft shifted its focus to investing in AI infrastructure, partnerships, and tools like Microsoft 365 Copilot and GitHub Copilot.

Nadella explained that the company has entered a new phase — not of mass hiring but of “targeted scaling,” where AI allows smaller teams to achieve much more. He described this as an “unlearning and learning process” in which employees must adapt to using AI in every part of their work, from research and planning to execution.

He shared an example of a Microsoft executive who used AI agents to manage the company’s fiber-network operations when hiring couldn’t keep up with growing demand. “That’s an example of a smaller team achieving more because of AI,” Nadella said.

Meanwhile, earlier this year, multiple reports suggested that Microsoft laid off 4 per cent of its workforce, or around 9,000 employees, in yet another round of job cuts this year. According to The Seattle Times in July this year, employees in Microsoft’s Xbox division, known as Microsoft Gaming, are being hit hard by these layoffs.

“To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness,” said Xbox leader Phil Spencer in a message to the team.