Microsoft CEO Satya Nadella said the company plans to increase its workforce after a year of layoffs and flat headcount, signaling confidence in how artificial intelligence will reshape employee productivity.
In an interview on the BG2 podcast with investor Brad Gerstner, Nadella said Microsoft will “grow our headcount,” but with greater efficiency than before the AI boom. “That headcount we grow will grow with a lot more leverage than the headcount we had pre-AI,” he said.
The software giant ended its 2025 fiscal year in June with around 228,000 employees, unchanged from the previous year after multiple rounds of layoffs that reduced staff by at least 6,000. In July, Microsoft cut another 9,000 jobs. Despite the reductions, Nadella emphasized that growth would resume once employees adapt to new ways of working with AI.
“It’s the unlearning and learning process that I think will take the next year or so, then the headcount growth will come with max leverage,” he explained. Nadella noted that Microsoft aims to ensure its workforce fully integrates AI tools into daily operations, particularly through Microsoft 365 and GitHub Copilot, both powered by models from OpenAI and Anthropic.
He compared the current shift to earlier technological transitions that redefined corporate workflows. “To prepare forecasts, inter-office memos would circulate across multiple sites by fax, and then came email and Excel spreadsheets,” Nadella said. “Right now, any planning, any execution, starts with AI. You research with AI, you think with AI, you share with your colleagues and what have you.”
The remarks come as Microsoft’s cloud rival Amazon cut 14,000 corporate jobs this week. Amazon’s senior vice president of people experience and technology, Beth Galetti, said in a memo that AI is “the most transformative technology we’ve seen since the Internet.”
Nadella shared an example of how AI has already boosted efficiency within Microsoft. One executive managing network infrastructure realized she could not hire the number of technicians originally planned, so she deployed AI agents to handle maintenance tasks instead. “That is an example of a team with AI tools being able to get more productivity,” Nadella said.
The shift appears to be paying off financially. Microsoft recently reported a 12% year-over-year increase in revenue and achieved its highest operating margin since 2002.
As the company continues to scale its AI-powered products and data center operations, Nadella made clear that future growth will focus not just on adding employees, but on transforming how they work.
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