Microsoft to Hire Again, But With an AI Focus: Nadella

Following a major layoff session across various divisions in 2024 and 2025, Microsoft is preparing to increase its workforce once again, with a clear focus on artificial intelligence (AI).

In an interaction with investor Brad Gerstner on the BG2 podcast, Microsoft CEO Satya Nadella stated that the company’s employee count will increase significantly this time, adopting a “smarter and more leveraged” approach driven by AI technology.

Additionally, Nadella stated that “We will grow our headcount,” following that future hiring will be shaped by how AI is responsible for boosting productivity across the whole organisation.

At the end of June 2025, Microsoft’s employee count was 228,000, with the headcount remaining almost unchanged, following several layoffs that affected nearly 15,000 workers.

The company expanded to only 22 per cent before the advent of the AI boom in 2022. Then, Microsoft shifted its focus to investing in AI infrastructure, partnerships, and tools like Microsoft 365 Copilot and GitHub Copilot, which led to consequences including hiring slowdowns and layoffs.

Nadella added that the Company has started following the new rules, which focus on targeted scaling rather than mass scaling, and increased adaptation of AI, enabling smaller teams to achieve significantly more.

He referred to this as shedding outdated beliefs and practices, enabling employees to master the art of AI for a more efficient and human-centred collaborative approach. This allows employees to adapt to AI in every aspect of their work, streamlining the process from planning to execution.

Nadella later shared the example of a Microsoft executive working in the company’s fibre network operations, highlighting how hiring couldn’t keep pace with growing demand when using AI agents. This example serves as a clear illustration of a smaller team achieving more with the help of AI.

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Multiple reports show that Microsoft has laid off around 4 percent of its workforce, which amounts to approximately 9,000 employees, in another cut this year. According to a report by The Seattle Times in July, the Xbox Division, also known as Microsoft Gaming, was the most affected department.