Microsoft plans to increase hiring after a year of workforce reductions, but CEO Satya Nadella said the company’s future growth will come with “a lot more leverage” enabled by artificial intelligence. Speaking on investor Brad Gerstner’s BG2 podcast on Friday, Nadella described how AI is reshaping the company’s structure, productivity, and approach to talent expansion.
Microsoft ended its 2025 fiscal year in June with 228,000 employees, unchanged from the previous year after multiple rounds of layoffs that eliminated at least 6,000 positions, followed by an additional 9,000 cuts in July. Despite these reductions, Nadella said Microsoft would grow its headcount again—but with employees who work alongside AI tools to achieve higher productivity levels.
“I will say we will grow our headcount, but the way I look at it is, that headcount we grow will grow with a lot more leverage than the headcount we had pre-AI,” Nadella said. He emphasized that the integration of AI tools into everyday workflows marks a new stage of efficiency and transformation within the company.
Nadella noted that employees are in the midst of an “unlearning and learning process” as they adapt to using AI technologies across Microsoft’s suite of products. He cited Microsoft 365 and GitHub Copilot—which draw on models developed by OpenAI and Anthropic—as central to this transition. According to Nadella, these systems are changing how employees research, plan, and collaborate. “Any planning, any execution, starts with AI. You research with AI, you think with AI, you share with your colleagues and what have you,” he said.
He compared the current AI-driven shift to earlier corporate transitions, such as when offices moved from faxed memos to email and Excel spreadsheets for data sharing and forecasting. Nadella said the company expects this adjustment to take roughly a year, after which new hiring will be aligned with the productivity gains AI delivers.
During the discussion, Nadella referenced a Microsoft executive managing networking fiber who automated parts of her team’s operations using AI agents as the company expanded data center capacity. “That is an example of a team with AI tools being able to get more productivity,” he said.
The comments came as Microsoft’s cloud rival Amazon announced the elimination of 14,000 corporate jobs this week. In a memo to employees, Amazon’s senior vice president of people experience and technology, Beth Galetti, described the current AI wave as “the most transformative technology we’ve seen since the Internet,” crediting it with accelerating innovation across industries.
Nadella’s remarks followed Microsoft’s latest earnings report, released Wednesday, which showed 12% year-over-year revenue growth and the company’s widest operating margin since 2002.
Featured image credits: Wikimedia Commons
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