Microsoft’s recent decision to lay off over 6000 employees sparked widespread concern across the tech industry. However, CEO Satya Nadella has made it clear: the reason is AI disruption, not performance.

In a series of internal meetings and media interactions, Nadella emphasized that artificial intelligence is fundamentally changing the nature of workleading Microsoft to restructure rolesnot penalize individuals.

A Strategic Shift Toward AI-First Operations

Over the last year, Microsoft has invested heavily in AI, partnering with Openai and integrating tools like Copilot across its productivity suite. As a result, many traditional roles are being reimagined or phased outespecially in functions that can now be automated or enhanced by AI agents.

Nadella described this as a strategic pivot to ensure Microsoft remains competitive in a future where AI will play a dominant role in software development, operations, support, and marketing.

What It Means for the Workforce

This wave of layoffs is not performance-according to Nadella, but a realignment of resources to meet the demands of an AI-powered enterprise. Employees in roles that are now being augmented or replaced by AI systems were affected, and new roles focused on AI development, implementation, and ethics are expected to open up.

Microsoft is also ramping up training and internal reskilling programs to help its workforce adapt.

AI Is Changing Everything

“Every layer of the tech stack is being transformed by AI,” Nadella stated. From cloud infrastructure to frontline productivity apps, AI is no longer a feature—it is the foundation.

Microsoft’s bold bet on AI is reshaping its workforce, operations, and long-term strategy. And while it comes with difficult decisions like layoffs, Nadella believes this is necessary to lead the next wave of tech innovation.