Microsoft offers voluntary severance to about 60,000 employees as AI investment drives efficiency adjustments
Microsoft announced a new voluntary severance program in the United States, Canada, India and the United Kingdom for employees at level 70 and below; about 60,000 people are eligible, roughly 27% of its total workforce of 223,000. Employees must decide in December whether to accept, and participants leave on December 31. Microsoft is increasing data center spending to meet AI computing demand; it launched its first voluntary retirement program in April this year and announced 4,800 layoffs in July.
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Amid pressure from AI infrastructure spending, Microsoft opens voluntary severance to about 60,000 people, giving readers a window into how big tech balances computing costs and labor costs.
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MSFTwatch nowVIDEO1:4001:40Microsoft offering buyouts to some employees in U.S., Canada, India and U.K.Squawk on the Street
Microsoft said Monday that it's offering buyouts to a wide swath of employees as it strives to balance a costly AI infrastructure buildout with capital efficiency.
The software maker announced a new voluntary exit offer for certain workers in the U.S., Canada, India and the United Kingdom at its experience level of 70 or below.
Around 60,000 people are eligible, according to a person familiar with the matter, who asked not to be named while discussing an internal matter. The effort affects about 27% of Microsoft's total workforce of 223,000 people.
Microsoft has been ramping up spending on data centers to accommodate high AI computing demand, supplying cloud services to Anthropic, OpenAI and a slew of other companies. That put a strain on Microsoft's finances. In April, it announced a first-ever voluntary retirement program that around 7% of U.S. employees were eligible for. Then, in July, Microsoft announced plans to lay off 4,800 employees.
"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," Amy Coleman, Microsoft's executive vice president and chief people officer, wrote in a memo to employees. "This builds on what we learned earlier this year through the Voluntary Retirement Program."
In the second quarter, Microsoft's cloud rivals, Alphabet and Amazon, both reported negative free cash flow, but Microsoft showed $19.64 billion in positive free cash flow for the period, down 23% year over year.
Some marketing, sales and engineering teams have decided not to participate in the new buyout, the person said. Employees must decide whether to take the offer in December, and those participating will leave on Dec. 31, the person added.
Over 30% of those who could join the voluntary retirement program went ahead with it, Microsoft said in July. But that was open to those at the senior director level and below, while the new initiative goes higher, to the vice president level, said the person briefed on the new plan. The person said Microsoft does not have a target in mind this time around.
On Wednesday Microsoft reports third-quarter results.
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