Record-Breaking Performance at Microsoft: Nadella Addresses Layoff Criticism as 'Enigma of Success'

Satya Nadella Personally Addresses the Situation

Satya Nadella, Chairman and CEO of Microsoft (MS), is delivering the keynote speech at the MS conference in Seattle, Washington, on May 19 (local time). Photo by AFP

Satya Nadella, Chairman and CEO of Microsoft (MS), explained in a company-wide email on July 24 (local time) that the recent wave of internal criticism following the layoff of approximately 15,000 employees since the beginning of the year was due to the "enigma of success."

In the memo sent to all employees that day, CEO Nadella stated, "By every objective measure, we are doing extremely well, yet we have carried out restructuring," adding, "This is the enigma of success in industries without franchise value." Franchise value refers to the value held by industries such as Coca-Cola and McDonald's, which pursue long-term performance through customer loyalty and branding.

He continued, "Progress isn't linear," noting, "It is dynamic, sometimes discordant, and always demands a difficult process. At the same time, through this, we can create, lead, and have a greater impact with new opportunities."

Recently, MS has made large-scale investments in artificial intelligence (AI) technology and generated significant profits, while simultaneously implementing workforce restructuring. In May this year, 6,000 employees were laid off, followed by 9,000 in July, totaling 15,000 layoffs. There are also plans to dismiss 2,000 underperforming employees. According to CNBC, the total number of employees as of June last year was 228,000. In his memo, CEO Nadella stated, "The overall workforce is essentially being maintained," but did not disclose the current headcount. Meanwhile, the company's stock price surpassed $500 for the first time on a closing basis on July 9.

As complaints erupted on social networking services (SNS), CEO Nadella appears to have personally stepped in to address the situation. Last year, there was also a large-scale workforce restructuring, but at that time, the CEO's memo did not mention the layoffs, leading to criticism that the company was "ignoring the pain," according to U.S. business media outlet Business Insider (BI).

The issue of workforce restructuring and resulting unemployment among U.S. big tech companies is not limited to MS. Notably, Intel is aggressively implementing layoffs, planning to reduce its workforce by 15% by the end of the year. The company aims to decrease its headcount from 99,500 at the end of 2024 to 75,000. However, in Intel's case, it is important to distinguish that this is part of manufacturing and factory restructuring and cost-saving strategies due to underperformance in its core business.