Microsoft Offers Voluntary Buyouts to Around 60,000 Employees, Cutting Costs to Make Room for AI Capital Spending!

Microsoft said on Monday that it will offer a voluntary severance programme to around 60,000 employees to cut costs, reshape its workforce and adapt its business to the artificial intelligence era. Selected employees in the United States, Canada, India and the United Kingdom at the vice president level and below will be eligible. This figure represents more than a quarter of its global workforce.  

According to people familiar with the matter, all employees in departments including Xbox, Windows, Copilot and finance are covered by the programme, while certain roles related to data centres, sales, marketing, cybersecurity and quantum computing are excluded. Microsoft’s chief people officer said the programme offers eligible employees who are already considering leaving the company and pursuing a new career path an additional option, allowing them to transition smoothly with support. Participating employees will receive benefits in line with the company’s standard severance package. As the world’s largest software company, Microsoft has already reduced its workforce through multiple rounds of layoffs in recent years.  

In July, Microsoft introduced a voluntary departure programme for employees approaching retirement. More than 30% of the approximately 8,750 eligible employees accepted the offer. A Microsoft spokesperson expects the acceptance rate for the latest voluntary departure programme to be considerably lower than that of the earlier voluntary retirement programme.  

As of the end of June, Microsoft had 223,000 employees. That figure has remained largely unchanged since 2022, around the time Microsoft began investing heavily in AI and data centres, putting pressure on budgets and prompting the company to tighten hiring in other areas.  

The company is scheduled to report its first-quarter results after the US market closes on Wednesday and has forecast capital expenditure of $175 billion for calendar year 2026. Investors will closely watch for signs that its massive AI investments are generating returns.  

As funding continues to shift towards AI infrastructure, several technology companies are also streamlining their workforces. Google reportedly introduced voluntary departure programmes across multiple business units last year, while Meta’s workforce has declined by more than 20,000 from its peak at the end of 2022. Both companies are also major investors in data centre infrastructure.  

A Microsoft spokesperson said the company wants to retain employees who are willing to tackle its toughest core challenges. This message echoes statements from executives at other technology giants: employees who want to stay must adapt to a faster pace of work and continuous change.  

Market Insight:

Voluntary departure programmes generally target employees with longer tenure and higher employment costs, with compensation packages typically more generous than those offered in involuntary layoffs. If key talent applies for voluntary departure, Microsoft may try to retain them depending on the circumstances. The buyout programme gives Microsoft’s departments another way to adapt their workforces to changing needs.