After layoffs, Satya Nadella signals hiring comeback at Microsoft, but with ‘AI leverage’ this time

CEO says next phase of hiring will focus on roles transformed by AI, not replaced by it

After a year marked by sweeping layoffs, Microsoft CEO Satya Nadella says the company is once again gearing up to expand its workforce, but with an AI-first mindset.

Speaking to investor Brad Gerstner on the BG2 podcast, Nadella said the company’s employee count will rise again, though in a 'smarter, more leveraged' way than before the AI revolution began.

“We will grow our headcount,” Nadella said. “But the way I look at it is, that headcount will grow with a lot more leverage than what we had pre-AI.”

Microsoft’s workforce stood at 228,000 at the end of its 2025 fiscal year in June, roughly unchanged after several rounds of job cuts totaling over 15,000 employees.

In 2022, before the AI boom, the company had expanded hiring by 22 percent. But that growth slowed dramatically as Microsoft restructured to invest more deeply in artificial intelligence infrastructure, partnerships, and productivity tools.

The CEO’s latest comments suggest that the company has reached a new inflection point, not of mass hiring, but of targeted scaling, where AI amplifies what fewer people can achieve.

‘Unlearning and learning’: how AI is rewriting work inside Microsoft

Nadella described this shift as an ongoing 'unlearning and learning process,' where employees must adapt to using AI in nearly every part of their work.

He pointed to how internal teams are already rethinking old workflows: “Right now, any planning, any execution, starts with AI,” Nadella said. “You research with AI, you think with AI, you share with your colleagues, everything begins there.”

The company wants every employee to harness AI capabilities across products such as Microsoft 365 Copilot and GitHub Copilot, which integrate models from OpenAI and Anthropic.

Nadella shared the story of a Microsoft executive overseeing the company’s vast fiber-networking operations. As demand for cloud data centers surged, she realized she couldn’t hire fast enough, so she built AI agents to handle maintenance tasks.

“That’s an example of a team using AI tools to get more productivity,” Nadella told Gerstner. “A smaller team achieving more because of AI.”

The message is clear: AI won’t just power Microsoft’s products, it will redefine how Microsoft works.

A familiar revolution, decades later

Drawing parallels to earlier technology shifts, Nadella likened today’s AI transition to the fax-to-email era of corporate communication.

“Decades ago, teams would send inter-office memos by fax before email and Excel changed everything,” he recalled. “Now we’re at that same kind of inflection point, only faster.”

In his view, AI is to the 2020s what spreadsheets were to the 1980s, the new baseline of productivity.

Rivals adjust, too: Amazon’s contrasting path

Microsoft’s hiring rethink comes as Amazon, its fiercest competitor in cloud infrastructure, cut 14,000 corporate jobs this week.

Amazon’s HR chief Beth Galetti said in a memo that “this generation of AI is the most transformative technology since the Internet,” highlighting how companies are reorganizing to compete in the AI economy.

While Amazon trims costs, Microsoft is betting on AI-augmented growth, investing in roles that can multiply output, not merely maintain it.

Profits and performance back the pivot

Microsoft’s financial health remains strong: its latest quarterly results showed 12% year-over-year revenue growth and the widest operating margin since 2002.

If 2023 and 2024 were years of contraction, 2025 may mark the start of Microsoft’s AI-scaled expansion.

Nadella’s remarks signal a clear evolution in corporate strategy, from headcount-driven growth to capability-driven scaling, where every hire is backed by machine intelligence.

“It’s the unlearning and learning process that will take the next year or so,” Nadella said. “Then the headcount growth will come, with maximum leverage.”

In other words, Microsoft’s next wave of employees won’t just use AI. They’ll build, train, and think with it.