Microsoft Offers Buyouts To 60,000 Employees Across US, India, UK And Canada Amid AI Push

Microsoft is offering voluntary buyouts to a broad section of its workforce as it seeks to balance heavy investment in artificial intelligence (AI) infrastructure with the need to maintain capital efficiency.

The software giant announced a new Voluntary Exit Offer for eligible employees in the US, Canada, India and the UK at experience level 70 or below. Around 60,000 employees are eligible for the programme, according to a person familiar with the matter, who spoke on condition of anonymity while discussing an internal matter. This represents approximately 27% of Microsoft's total workforce of 223,000, CNBC reported.

Microsoft Balances AI Spending With Workforce Changes

Microsoft has been increasing its spending on data centres to meet rising demand for AI computing and provide cloud services to companies including Anthropic and OpenAI. The investment has put pressure on the company's finances, prompting it to explore workforce restructuring measures.

In April, Microsoft announced its first-ever voluntary retirement programme, which was open to around 7% of its US workforce. In July, the company also announced plans to lay off 4,800 employees.

Amy Coleman, Microsoft's executive vice president and chief people officer, said the latest initiative was intended to give employees greater flexibility as the company adapts to changing business needs.

"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 in a memo to employees. She added that the initiative builds on lessons learned from the voluntary retirement programme introduced earlier this year.

Microsoft Seeks To Adapt To AI-Driven Business Shift

The company is undergoing a broader business model transformation, increasingly looking to charge clients based on their actual AI usage. It has also equipped employees across programming, sales and supply-chain functions with AI tools, reporting noticeable results from their adoption.

At the same time, the 51-year-old maker of Windows and Office is seeking to ensure it has the right talent to pursue its most promising growth opportunities.

The challenge is to make these changes without weakening its financial position. In the second quarter, cloud rivals Alphabet and Amazon both reported negative free cash flow, while Microsoft recorded positive free cash flow of $19.64 billion. However, the figure was down 23% year-on-year.

Employees Have Until Early December To Decide

Some marketing, sales and engineering teams have opted not to participate in the new buyout programme, according to the person familiar with the matter.

Eligible employees must decide whether to accept the offer by early December, with those who participate expected to leave the company on December 31.

Microsoft said in July that more than 30% of employees eligible for its voluntary retirement programme had opted to participate. That initiative, however, was open to employees at the senior director level and below. The new offer extends eligibility up to the vice-president level, the person said.

Unlike the earlier programme, Microsoft has not set a target for the number of employees it expects to leave through the latest offer, according to the person.

Microsoft is scheduled to report its third-quarter results on Wednesday.