Microsoft Plots AI-Powered Hiring Surge After Layoffs, Nadella Reveals

After a year characterised by significant workforce reductions, Microsoft is signaling a strategic pivot back to expansion, but this time every new hire will ride a wave of artificial intelligence to punch far above their weight.

In a candid chat with investor Brad Gerstner on the BG2 podcast, Microsoft CEO Satya Nadella confirmed that the company's employee base is set to grow again. However, this growth will be dramatically different from the pre-AI expansion years, focusing on unprecedented leverage from machine intelligence.

The New Math: Headcount with 'Max Leverage'

The company closed its 2025 fiscal year in June with 228,000 employees, a figure held steady after multiple layoff rounds that axed at least 15,000 roles. A fresh cut of 9,000 in July underscored the belt-tightening.

Yet Nadella struck an optimistic note. “We will grow our headcount,” he declared. “But the way I look at it is, that headcount will grow with a lot more leverage than what we had pre-AI.”

Before ChatGPT lit the fuse in 2022, Microsoft’s workforce ballooned 22% in a single year. That era of unchecked expansion has given way to a leaner, AI-augmented blueprint.

Rewiring Workflows

Nadella painted a vivid picture of internal transformation. “Right now, any planning, any execution, starts with AI,” he said. “You research with AI, you think with AI, you share with your colleagues, everything begins there.”

Every worker is expected to wield tools like Microsoft 365 Copilot and GitHub Copilot, powered by models from OpenAI and Anthropic.

To illustrate the immediate, tangible benefits of this approach, Nadella shared the story of an executive overseeing Microsoft’s vast fiber-networking operations.

Unable to staff up fast enough, she engineered AI agents to handle fiber maintenance. “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.”

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The Unlearning Curve

This shift demands a cultural overhaul. “It’s the unlearning and learning process that will take the next year or so,” Nadella predicted. “Then the headcount growth will come, with maximum leverage.”

He likened the moment to the fax-to-email leap of the 1980s and 1990s. Back then, memos crawled between offices; spreadsheets and email rewrote the rules. Today, AI is the new baseline.

This push for AI-augmented growth at Microsoft comes even as its cloud rival, Amazon, recently announced cuts of 14,000 corporate jobs. Amazon's HR chief, Beth Galetti, noted the industry-wide restructuring, calling AI "the most transformative technology we’ve seen since the Internet."

Financial Firepower Fuels the Pivot

Microsoft is betting on an investment-driven, capability-driven expansion. Backed by strong financial health, including 12% year-over-year revenue growth and the widest operating margin since 2002 in its latest quarter.

Nadella’s strategy positions 2025 not as a year of contraction, but as the start of an AI-scaled growth period. The next wave of hires will be selected for their potential to multiply output, not merely to maintain it.