After layoffs, Microsoft to hire again: Satya Nadella says AI will power a 'smarter, leaner’ workforce

After a bruising year of layoffs and hiring freezes, Microsoft is preparing to expand its workforce once more. But this round of growth, Chief Executive Satya Nadella says, will look markedly different from the past.

Speaking on investor Brad Gerstner’s BG2 podcast, Nadella confirmed that Microsoft intends to grow its headcount again after cutting roughly 15,000 positions over the past year, including 9,000 in July. The tech giant closed its 2025 fiscal year with about 228,000 employees.

“I will say we will grow our headcount,” Nadella said, “but that headcount will grow with a lot more leverage than we had pre-AI.”

That leverage, he explained, will come from the company’s deepening reliance on artificial intelligence. Microsoft has been reshaping its internal workflows around AI-powered tools like Microsoft 365 Copilot and GitHub Copilot — products built on technology from OpenAI and Anthropic. The shift, Nadella said, represents a period of “unlearning and learning” for employees adapting to a new rhythm of work defined by automation and intelligent assistance.

He likened the transformation to the corporate world’s earlier pivot from fax machines and paper memos to email and Excel. “Right now, any planning, any execution, starts with AI,” he said. “You research with AI, you think with AI, you share with your colleagues and what have you.”

The comments come just days after Amazon — Microsoft’s closest rival in cloud computing — announced plans to cut 14,000 jobs. Amazon’s human resources chief, Beth Galetti, described AI as “the most transformative technology since the Internet.”

Microsoft, meanwhile, appears to be reaping the rewards of its early bet on the technology. The company reported a 12 percent increase in revenue from a year earlier and its highest operating margin since 2002, signaling that its AI-fueled efficiency drive may be setting the stage for a new era of leaner, smarter growth.