Following the criticism from US Vice President JD Vance regarding Microsoft's use of the H-1B visa system amid thousands of job cuts, CEO Satya Nadella responded with an internal memo to employees today. Nadella acknowledged the paradox of letting go of employees while Microsoft achieves record profitability and expansion in AI.
Nadella emphasised that the ‘overall headcount is relatively unchanged,’ which further suggested that the layoffs were more about restructuring than downsizing. Nadella described the decision to cut jobs as ‘the most difficult we have to make’, calling it a painful but necessary step to remain competitive and future-ready.
What is the H-1B Visa System?
The H-1B visa is a non-immigrant work visa which is issued by the United States government. This visa enables the companies to hire foreign workers in speciality occupations- especially in fields like technology, finance, engineering and healthcare.
To qualify, the job must typically require a bachelor’s degree or higher, and the employer must sponsor the worker. This visa system is widely used by some leading tech companies, including Microsoft, Amazon, Google, and more, which helps to fill the skill gaps with international talent.
Microsoft laid off 9000 employees in 2025: Underperformance became a major issue
Microsoft has laid off at least 9,000 employees this year, with 2,000 reportedly let go due to underperformance and the rest impacted by AI-related restructuring. Meanwhile, Microsoft’s stock soared past USD 500 for the first time, and its net income has reached USD 75 billion across the last three quarters.
The company has also poured USD 80 billion into AI infrastructure and plans to share Q4FY25 results on July 30. Nadella assured that these investments reflect Microsoft’s dynamic business model and evolving production functions aimed at scaling innovation.
Why did it lead to layoff allegations at Microsoft?
Microsoft’s move to lay off more than 9000 workers sparked public and political backlash, especially when it was revealed that the company filed more than 6000 H-1B applications during the same period.
Here’s what triggered the controversy:
- U.S. Vice President JD Vance accused Microsoft of prioritising H-1B workers over American employees.
- Laid-off staff questioned why jobs were being cut if new visa hires were being brought in.
- Social media reports alleged that even long-serving H-1B workers were being sent home abruptly, sometimes before their 60-day grace period.
In defence, Microsoft's CEO takes the front foot
CEO Satya Nadella addressed the issue and stated:
- The overall headcount remained ‘relatively unchanged’.
- Visa applications were largely renewals for existing employees, not new hires.
- Layoffs were part of business restructuring and AI adaptation, not simply to make way for foreign workers.
According to reports, Microsoft filed over 6,000 H-1B visa applications since October 2024, raising concerns among lawmakers and employees.
Some laid-off H-1B workers claimed they received removal notices even before their 60-day grace period ended. However, Microsoft supporters argued the company simply renewed existing employee visas and did not replace fired workers with new foreign hires.
