Microsoft offers buyouts to 60,000 workers to offset AI spending

Ninety-three percent of Microsoft's global workforce remains employed, but 27% of that total, roughly 60,000 people, now holds the option to leave the company voluntarily. The Redmond, Washington-based firm announced the offer on Monday, extending the window for employees in the United States, Canada, India, and the United Kingdom to accept a financial package for their departure.

The eligibility criteria for this new initiative reach up to experience level 70, which includes the vice president tier. This marks a higher ceiling than the voluntary retirement program launched in April, which was limited to staff at level 67 and below. A person familiar with the internal discussions noted that while the April program saw more than 30% of eligible workers participate, Microsoft has not set a specific headcount target for the current round.

The push for capital efficiency comes as the company ramps up spending on artificial intelligence infrastructure. Microsoft reported in July that capital expenditures for the September quarter were expected to exceed $50 billion, a sharp increase from the $34.9 billion recorded in the same period a year prior. The company is building out data centers to handle computing demand from clients including Anthropic and OpenAI, a strategy that has pressured its financial profile despite strong earnings.

Amy Coleman, the executive vice president and chief people officer, framed the move as an evolution of the company's approach to change. In a memo to employees, she wrote that the offer aims to create greater flexibility and provide more ways for staff to shape their next chapter. She noted that the initiative builds on lessons learned from the earlier voluntary retirement program, which preceded a round of layoffs affecting 4,800 employees announced in July.

Microsoft is also 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, reporting noticeable results in productivity. This operational change is part of a broader effort to align talent with new growth opportunities while maintaining a strong financial base.

The company's financial position remains distinct from its peers. In the second quarter, rivals Alphabet and Amazon reported negative free cash flow, whereas Microsoft posted positive free cash flow of $19.64 billion. That figure represents a 23% year-over-year decline but still provides a cushion as the company absorbs the costs of its AI buildout.

Employees have until early December to decide whether to accept the offer. Those who participate are scheduled to depart on December 31. Some marketing, sales, and engineering teams have opted out of the program, according to the person familiar with the matter. Microsoft is scheduled to report its third-quarter results on Wednesday.