60,000 Microsoft employees eligible for voluntary exit as AI costs mount

Microsoft is offering voluntary buyouts to approximately 60,000 employees, a move that affects roughly 27% of its total workforce of 223,000 people. The company announced the offer on Monday for workers in the United States, Canada, India, and the United Kingdom who hold experience level 70 or below.

The decision comes as the software maker balances a massive build-out of artificial intelligence infrastructure with a need for capital efficiency. Microsoft stated in July that capital expenditures for the September quarter should exceed $50 billion. This figure represents a sharp increase from the same period a year ago, when capital spending and finance leases totaled $34.9 billion.

The heavy spending on data centers to supply cloud services to clients such as Anthropic and OpenAI has strained the company's finances. In April, Microsoft launched its first voluntary retirement program, which was available to about 7% of U.S. employees. In July, the company announced plans to lay off 4,800 staff members.

Amy Coleman, Microsoft's executive vice president and chief people officer, addressed the new offer in a memo to employees. She described the initiative as part of the company's evolving approach to change, aimed at creating greater flexibility for staff. Coleman noted that the program builds on lessons learned from the earlier Voluntary Retirement Program.

Unlike the previous retirement program, which was open to senior directors at level 67 and below, the new buyout extends to the vice president level. A person familiar with the matter said Microsoft does not have a specific target number of participants in mind. More than 30% of eligible employees accepted the earlier retirement offer, according to data released in July.

Some marketing, sales, and engineering teams have chosen not to participate in the new buyout. Employees must decide whether to accept the offer by early December. Those who participate will leave the company on December 31.

Microsoft is currently transforming its business model to charge clients based on actual AI usage. The company has implemented AI tools for programmers, sellers, and supply chain workers. In the second quarter, Microsoft reported positive free cash flow of $19.64 billion, a 23% decrease from the prior year, while cloud rivals Alphabet and Amazon reported negative free cash flow for the same period.