Tech Layoffs: Why Microsoft Fired 9,000 Employees Despite Thriving Business

In a candid memo to employees, Microsoft CEO Satya Nadella acknowledged that the tech giant has laid off over 9,000 employees, despite the company’s strong performance. The layoffs account for 7% of Microsoft’s global workforce, which comprises approximately 200,000 employees.

Stating that the recent job cuts have been “weighing heavily” on him, Nadella described the decision as one of the “most difficult” he has had to make.

“They affect people we’ve worked alongside, learned from, and shared countless moments with—our colleagues, teammates, and friends,” he wrote.

It is worth noting that the layoffs come despite Microsoft reporting $75 billion in net income over the last three fiscal quarters. The company’s stock has also risen by 21% this year, hitting record highs above $500 per share. This contrast has led many to question the rationale behind the job cuts.

Addressing the contradiction, Nadella said: “By every objective measure, Microsoft is thriving—our market performance, strategic positioning, and growth all point up and to the right.”

He described the situation as “the enigma of success in an industry that has no franchise value,” emphasizing that progress isn’t linear: “It’s dynamic, sometimes dissonant, and always demanding.”

Justifying the company’s decision, Nadella said that future success will depend on Microsoft's ability to “go through this difficult process of unlearning and learning.”

He explained that this transformation requires the company to “meet changing customer needs by continuing to maintain and scale our current businesses, while also creating new categories with new business models and a new production function.”

As Microsoft invests $80 billion in AI infrastructure, Nadella highlighted the company’s strategic shift from a “software factory to an intelligence engine.”

He envisioned a future in which “all eight billion people could summon a researcher, an analyst, or a coding agent at their fingertips.”

Framing the layoffs as part of the transition toward AI-driven automation, Nadella expressed sincere gratitude to those who have left. However, he did not offer any guarantees against future layoffs. Instead, he urged remaining employees to maintain a “growth mindset” amid what he called the “messiness of transformation.”

Also read: Embrace AI or Else: Microsoft Warns Employees After 15,000 Layoffs