Microsoft Extends Buyout Offers to 60,000 Staff to Manage AI Costs

Sixty thousand employees are eligible for a new voluntary exit package at Microsoft, according to a person familiar with the internal matter. The offer applies to workers in the United States, Canada, India, and the United Kingdom who are at experience level 70 or below. This group represents approximately 27% of the company's total workforce of 223,000 people.

Microsoft has intensified spending on data centers to meet rising demand for AI computing power. The company supplies cloud services to clients including Anthropic and OpenAI. Capital expenditures for the September quarter are projected to exceed $50 billion, a sharp increase from the $34.9 billion spent in the same period last year. This financial pressure has prompted a series of workforce adjustments this year.

In April, Microsoft launched its first voluntary retirement program, which was available to roughly 7% of U.S. employees. By July, the company announced plans to lay off 4,800 staff members. More than 30% of those eligible for the spring retirement program accepted the offer, Microsoft reported in July. That earlier program was limited to staff at the senior director level, or experience level 67, and below. The new initiative extends the offer to the vice president level.

Amy Coleman, the company's executive vice president and chief people officer, addressed the staff in a memo. "The Voluntary Exit Offer reflects an important part of how we're evolving our approach to change: creating greater flexibility and, where possible, more ways for employees to shape their next chapter," Coleman wrote. "This builds on what we learned earlier this year through the Voluntary Retirement Program."

Microsoft is shifting its business model to charge clients based on actual AI usage. The company has equipped programmers, sales teams, and supply chain workers with AI tools and reports observing measurable results. In the second quarter, Microsoft reported $19.64 billion in positive free cash flow. While this figure is down 23% year over year, it contrasts with the negative free cash flow reported by rivals Alphabet and Amazon during the same period. Some marketing, sales, and engineering teams have opted out of the new buyout round.

Employees must decide whether to accept the offer in early December. Those who participate will depart the company on December 31. The person familiar with the plan stated that Microsoft has not set a specific target number of departures for this round. The company is scheduled to release its third-quarter financial results on Wednesday.