Nadella is Executive Vice President for Cloud and Enterprise at Microsoft and was a member of the technology staff at Sun Microsystems before joining Microsoft.
A native of Hyderabad, Nadella earned a bachelor's degree in electrical engineering from Mangalore University, a master's degree in computer science from the University of Wisconsin and a master's degree in business administration from the University of Chicago.
A report in Wall Street Journal's 'All Things D' blog said that Ford CEO Alan Mulally and Nadella are in the lead positions to take over as CEO of Microsoft.
Mulally remains in the "pole position for the job, with the idea that he will be more a 'caretaker' type CEO, whose deep experience and inspirational charisma will get the company on the right path, while also training up a number of internal candidates to eventually takeover from him.
"The top pick among the possible heirs inside for that princeling role: Enterprise chief Satya Nadella," it reported.
Microsoft talent search documents says it is looking for someone with an "extensive track record in managing complex, global organisations within a fast-paced and highly competitive market sector; track record of delivering top and bottom line results; proven ability to lead a multi-billion dollar organisation and large employee base.
Microsoft executive Tony Bates and former Nokia Oyj CEO Stephen Elop are also in the fray but are "currently considered less likely to be offered the job."
Microsoft board is looking for a quick replacement for Ballmer, who had said in August that he will retire within the next one year.
"The board had met on November 18 over the issue of finding a replacement for Ballmer," Microsoft chairman and co-founder Bill Gates said at a shareholder meeting last week.
Gates said he and other directors have met with "a lot of CEO candidates" adding that "it's a complex role to fill.