Dharma in Business: Why Being Fair Means Moving Fast
I first called Microsoft’s exit offer to 60,000 employees greed. Then I studied the numbers and remembered my own costly mistake at Gofrugal.
I woke up on 27th October 2026 to the news that Microsoft had offered a voluntary exit to 60,000 employees. That is 27% of its workforce.
I was expecting large layoffs in technology companies. Still, I was shocked when I read the news. My mind could not process the idea that 1 in 4 people at Microsoft would be affected.
I am 57. Every day, I feel grateful that this AI disruption is happening around my retirement age and not in my early or mid career. I also feel grateful that I am no longer an operator responsible for a large team or company. I know how hard it is to be on either side of such a decision. That gratitude makes me feel even more for the people who are living through it today, both the employees and the leaders.
Given how well Microsoft’s business is doing, the first question in my mind was simple. Is this action dharmic? My immediate answer was no. I felt the action was driven by greed.
Thiruvalluvar says:
எப்பொருள் யார்யார்வாய்க் கேட்பினும் அப்பொருள்
மெய்ப்பொருள் காண்ப தறிவு
Whatever you hear, and from whoever you hear it, wisdom is to find the truth in it.
So I decided to check the facts before holding on to my first reaction. What I found surprised me. It also took me back to one of the hardest periods of my own journey as a founder.
First, the facts about the offer
The first thing I learnt is that 60,000 employees are eligible for the offer. That does not mean 60,000 will leave.
The offer covers employees at vice president level and below, in selected teams, in the US, Canada, India and the UK. Some teams, including sales and marketing, are excluded. Employees who accept will get a severance package. They have until early December to decide.
Earlier this year, Microsoft ran a voluntary retirement program for about 8,600 employees, and around 30% of them accepted. For this offer, Microsoft expects far fewer takers. Companies that ran similar programs saw about 5 to 6% of eligible employees leave. If that holds, around 3,000 to 4,000 people may leave, not 60,000.
That is still a large number of families. It matters to us in India too, because India is one of the four countries. But it is very different from 1 in 4.
How Microsoft’s business is performing
Next, I looked at Microsoft’s performance over the last three financial years. Microsoft’s financial year ends on 30th June.
1. Revenue per employee grew every year, from USD 959,000 in 2023 to USD 1.49 million in 2026. That is a compound annual growth of 16%.
2. Operating profit per employee grew from USD 400,000 in 2023 to USD 696,000 in 2026. This is before tax, and it excludes investment gains and interest income. That is a compound annual growth of 20%.
3. Capital expenditure per employee grew from USD 127,000 in 2023 to USD 520,000 in 2026. That is a compound annual growth of 60%. In 2026 alone, it grew 83% over 2025.
4. The number of employees barely changed. It was 221,000 in 2023, 228,000 in both 2024 and 2025, and 223,000 in 2026.
In three years, revenue per employee grew 55% and operating profit per employee grew 74%. Capex per employee grew about 4 times. Microsoft delivered impressive growth without adding people. But its capex is growing three times faster than its operating profit, and that growth accelerated in 2026.
How the balance sheet is changing
Then I looked at the balance sheet.
Microsoft’s cash and short-term investments fell from USD 111 billion in 2023 to USD 77 billion in 2026. Part of this went into the USD 69 billion acquisition of Activision Blizzard. Dividends also take a large amount every year. But the biggest change is AI infrastructure. Annual capex went from USD 28 billion in 2023 to USD 116 billion in 2026. Capex now takes all the growth in profit, and some of the cash in hand as well.
At the same time, Microsoft’s order book grew from USD 224 billion in 2023 to USD 678 billion in 2026. This is revenue that customers have contracted but Microsoft has not yet recognised. It shows very strong demand. The risk is concentration. At least a third of this order book, an estimated USD 220 to 280 billion, is tied to one customer, OpenAI.
Debt and lease obligations grew from USD 121 billion in 2023 to USD 458 billion in 2026. Most of this increase comes from data centre leases. USD 329 billion of it is leases Microsoft has signed but which have not yet started.
In summary, Microsoft has swapped cash for commitments. Its order book tripled. Its obligations grew almost 4 times. Its cash cushion shrank by a third. In 2023, Microsoft had USD 32 billion more cash than its debt and lease liabilities. In 2026, if we treat leases as debt, it has USD 52 billion of net debt.
Let me be fair here. Microsoft is not in any financial trouble. It earned USD 155 billion of operating profit in 2026. It generated USD 183 billion of cash from operations. Even after its huge capex, it still had free cash flow left over. Microsoft is not betting the company. But it is making the boldest bet in its 51-year history.
Why reduce people when the business is doing so well?
My next question was how this offer connects to the AI bet. The salary savings alone cannot fund it. Even if every eligible employee left, the savings would cover only a small part of one year’s capex.
The real connection is in the profit and loss statement. Every data centre Microsoft builds becomes depreciation in the coming years. Depreciation and amortisation grew from about USD 29 billion in 2025 to about USD 39 billion in 2026, and they will keep growing. Microsoft has told investors that its operating margin will fall by less than one percentage point in 2027. To keep that promise while depreciation rises, other costs have to come down. People costs are among the largest of those costs.
There is a second reason. AI is changing the skills a software company needs. Microsoft’s product R&D headcount has fallen for two years in a row, even as revenue grew at a record pace. The company is reshaping its workforce for a different kind of work.
Is it dharmic?
With this understanding, I went back to my first question.
I was reminded of a speech by Mr. D. Venkateshwaran, Chairman of Ulavan Producer Company and Trustee of Kongu Engineering College. He spoke at a Young Entrepreneur School (YES) event in Madurai in 2018. He said:
தொழிலில் தர்மம் செய்யாதே
Get Kumar Vembu’s stories in your inbox
Join Medium for free to get updates from this writer.
தர்மத்தை தொழிலாக செய்யாதே
This means, do not do charity in your business. Do not make charity your business.
In this saying, the word தர்மம் means charity. In my title, dharma means righteousness. I realised the two meanings answer two different questions. A business does not owe its employees charity, but it always owes them fairness.
Keeping people the company does not need is not kindness. When people are under-utilised or have no meaningful work, they become dissatisfied and unhappy. Over time, this leads to frustration, more politics and lower morale across the team. So it is in the long-term interest of both the employees and the company to have the necessary, sufficient and right team for the company’s future.
Thiruvalluvar explains this kind of fairness:
தகுதி எனவொன்று நன்றே பகுதியால்
பாற்பட்டு ஒழுகப் பெறின்
Fairness is a virtue only when one treats every party with justice.
A company has many parties to be fair to. Its employees, its customers, its shareholders and its own future are all among them. So I asked myself a different question. Is Microsoft treating its employees fairly while it does what its future requires?
Seen this way, a voluntary offer with severance is fairer than a sudden forced layoff. It lets people choose. It gives them time and money to plan their next step. I would also like Microsoft to say clearly what happens if not enough people choose to leave. Fairness includes honesty about what comes next.
I do not want to make this sound easy. For an employee who opens that email, it is not a strategy. It is a question about their family’s future. Many of them built the very business that now makes this bet possible. I hold that in my mind even as I try to understand the company’s decision.
Learning from Microsoft’s risk appetite
One guiding principle I learnt during my cricket days, and tried to practise throughout my career, is to put the team and the company first.
If I put Microsoft’s interest first, the leadership’s first priority is clear. It has to do what it takes to stay relevant and to strengthen its leadership position. The AI disruption is real. AI today looks like a winner-takes-all market. As one of the leaders, Microsoft has no option but to play to win. It needs as much capital as it can generate to fund the future.
Thiruvalluvar says:
எண்ணித் துணிக கருமம் துணிந்தபின்
எண்ணுவம் என்பது இழுக்கு
Think deeply, then commit to the action. To start thinking after committing is a disgrace.
Microsoft’s leadership seems to have done exactly this. They studied the opportunity, developed conviction and committed fully. Their capex, their leases and now this offer all point in the same direction. I still find the decision hard to digest. But I admire their conviction and the speed of their decisions.
What my own journey taught me
This made me think about us in India, and about my own journey.
I believe most entrepreneurs in India, including myself, are entrepreneurs only once. The moment we succeed, we want to protect and preserve our wealth. We stop taking big risks. But my own biggest mistake came even before success. I planned too small from the very beginning.
I founded Gofrugal in November 2004 with limited capital. I spotted the opportunity early. The leadership of trade associations across India validated our value proposition, and it was very compelling. That gave me the deep conviction to keep going for 19 years despite years of business losses. In hindsight, one of my biggest mistakes was that I never worked out what it would take to fully capture that opportunity, ride the wave and grow the business. I always planned within the capital I had in hand. I made hiring decisions to suit my cash in hand, not to get the right talent for the business.
I also gave product development much more priority than marketing and customer acquisition. As a result, we built product capabilities far ahead of customer adoption. I was focused on making my runway last as long as possible.
Looking back, I should have done the opposite. I should have limited product development and moved that capital into marketing and customer acquisition. I should have built a customer acquisition flywheel, accelerated growth and used that growth to demonstrate the market opportunity. Then I should have raised capital and revisited how I allocated it.
I learnt by failing that a CEO’s primary responsibilities are cash flow and capital allocation. By the time I learnt this, I did get access to capital. But by then I had a completely different set of problems to deal with.
The biggest problem was people. Because I had hired to suit my cash in hand, many people were in roles that did not match their skills. I did not want to make another wrong people decision. I also wanted to be fair. So I spent a long time working with each team. I identified people whose skills did not fit their current team but who could be given an opportunity in another team. I let someone go only when they were not willing to learn or to take responsibility for their performance.
I worked on this for more than two years before I restarted hiring. My priority was being fair to people, not doing what was best for the business at that time. While I was correcting my mistakes, the focus on taking the product to market suffered. I was not acting fast.
What I did not see then was the cost of my slowness to the people themselves. While I took my time on my quest for fairness, everyone in the team lived with fear, anxiety and uncertainty. Nobody knew who would be moved, who would stay and who would be let go. This lack of psychological safety continued during those two years and for another two years after. It resulted in poor outcomes in hiring and retention. Gofrugal paid a huge price for my foolish quest for fairness.
I learnt that prolonged uncertainty is itself unfair. I was trying to be fair to a few individuals, and I ended up being unfair to the whole team. Fairness and speed are not enemies. Fairness needs speed.
This is why Microsoft’s decisions stand out to me. It is doing what I failed to do. It is moving capital away from what matters less today and towards where the future opportunity is. And it is trying to stay fair while moving fast. It is letting people choose to leave with severance instead of forcing them out, and it has given them a clear timeline to decide. It is doing this at a scale and speed that most of us would find frightening.
I have always felt that this fear is one of the main reasons most Indian companies do not survive major technology disruptions. Leading global technology companies keep taking risks. They pioneer new technologies, and they invest boldly when disruption arrives.
Indian founders and business owners must learn what a leader should do when facing disruption. We must identify the opportunity early and develop conviction. We must work out what it really takes to win, not just what our current cash allows. Then we must allocate capital boldly, raise more when the opportunity demands it, and double down in every way possible. And we must stay fair to our people by being clear and moving fast.
What I concluded
My heart and my head fought over this question for a long time. My heart still feels for the people who will receive that email. My head now sees a company choosing long-term relevance over short-term comfort.
I started by thinking this was greed. I ended by seeing a company acting in its own long-term interest while trying to remain fair. With a voluntary offer, severance and a clear timeline, it is doing much of what fairness asks, without giving up speed.
I spent years being fair at the cost of speed, and my team paid for it with years of uncertainty. I wish I had known then what Microsoft seems to know now. Being fair means being clear and moving fast. To me, that is dharma in business.
I would love to hear from other founders.
Have you faced a moment where you had to choose between being fair and moving fast? I am eager to learn what you chose and what it cost you.
