Microsoft has managed to grow revenues while keeping headcount flat since AI became mainstream, and it seems that rejigging its team structures with the help of the new technology had something to do with it.
Speaking on the All-In podcast at Davos, Microsoft CEO Satya Nadella revealed a significant organizational transformation at LinkedIn that exemplifies how AI is fundamentally reshaping work structures in tech companies. When pressed by host Jason Calacanis about how Microsoft added $90 billion to its top line and doubled its income over four years without increasing headcount, Nadella pointed to structural changes enabled by AI rather than simple automation or overstaffing corrections.
“I think it’s actually you’re pulling on a very interesting thread, which is at some level, what’s the big structural change that needs to happen,” Nadella explained. “So the work, the work artifact and the workflow all changed. That’s what’s happening.”
The Microsoft chief then provided a concrete example from LinkedIn: “We used to have product managers. We had designers, we had frontend engineers, and then we had backend engineers and so on. So what we did is we sort of took those first four roles and combined them, in fact, increased scope and said, let’s, they’re all full-stack builders. So I like that because that’s a structural change that allows for us to increase the change, both the work and the workflow between these functions.”
Calacanis noted the velocity implications: “And I would assume the velocity because you don’t have four people communicating.”
“Exactly,” Nadella confirmed, with Calacanis adding, “And that throughput of ideas, which is one person and vibe coding.”
“Exactly. And there’s a new workflow,” Nadella continued. “So at the same time as you can imagine if to build an AI product today, there’s a complete new workflow, right? And so a lot of what is happening inside tech is that change, which I think is gonna be pretty massive.”
The implications of this transformation extend far beyond Microsoft. By collapsing four distinct roles into a single “full-stack builder” position, the company isn’t just eliminating coordination overhead, but it’s fundamentally reimagining how digital products are conceived and built. AI coding assistants have made it feasible for individual contributors to handle tasks that previously required specialized expertise across product management, design, and engineering disciplines. This aligns with broader industry trends: Meta has similarly flattened its organization, while Google has been restructuring teams to reduce management layers. The shift suggests we’re entering an era where AI doesn’t simply automate existing jobs but enables entirely new organizational structures that were previously impractical, allowing tech companies to scale revenue without proportionally scaling headcount.