Microsoft Offers Voluntary Buyouts to About 60,000 Employees

Microsoft said Monday it is offering voluntary buyouts to certain employees in the U.S., Canada, India and the United Kingdom as it seeks to balance a costly artificial intelligence infrastructure build-out with capital efficiency. Around 60,000 employees are eligible across the four countries, according to a person familiar with the matter. The move comes six months after Microsoft announced its first-ever voluntary retirement program to a small set of U.S. workers and follows a July plan to lay off 4,800 employees.

Eligibility and Scope

The new voluntary exit offer applies to certain workers at experience level 70 or below in the four countries. Around 60,000 people are eligible, according to the 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. Some marketing, sales and engineering teams have decided not to participate in the new buyout, the person said.

AI Spending and Financial Balance

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. The company is in the midst of a business model transformation, increasingly trying to charge clients based on how much AI they actually use. It has armed programmers, sellers and supply chain workers with AI tools and observed noticeable results. At the same time, the 51-year-old maker of Windows and Office wants to ensure that it has the right talent to go after its most compelling new growth opportunities, without weakening its financial profile. In the second quarter, 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.

Company Statement

'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.'

Timeline and Prior Programs

Employees must decide whether to take the offer in early December, and those participating will leave on Dec. 31, the person added. In April, Microsoft announced a first-ever voluntary retirement program that around 7% of U.S. employees were eligible for. More than 30% of those who could join that program went ahead with it, Microsoft said in July. That earlier program 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 is scheduled to report third-quarter results.

Sources: CNBC · KUOW