Microsoft Offers Buyouts To 60,000 As AI Costs Climb

Microsoft is offering voluntary buyouts to about 60,000 employees, a group representing roughly 27% of its 223,000-person workforce, as the company balances a heavy data center build-out with cost control.

The offer applies to workers in the U.S., Canada, India and the United Kingdom at experience level 70 and below. Employees must decide by early December, and those who take it leave on Dec. 31, according to a person familiar with the matter. Some marketing, sales and engineering teams have chosen not to participate.

Microsoft has been spending aggressively to meet AI computing demand, supplying cloud services to Anthropic, OpenAI and other companies. Capital expenditures for the September quarter were projected in July to exceed $50 billion, up from $34.9 billion in capital spending and finance leases in the same quarter a year earlier. The company reported $19.64 billion in positive free cash flow for its second quarter, down 23% year over year, while Alphabet and Amazon both posted negative free cash flow in that period.

Amy Coleman, Microsoft's executive vice president and chief people officer, told employees in a memo that the 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." The company said in July that more than 30% of those eligible for an earlier voluntary retirement program joined it. That program was open to senior director level 67 and below; the new initiative extends to vice president level. Microsoft does not have a target for participation this time, the person briefed on the plan said.

Microsoft announced the first voluntary retirement program in April for about 7% of U.S. employees, then said in July it would lay off 4,800 workers. The company reports third-quarter results Wednesday.

The company is shifting how it charges clients, moving toward pricing based on AI usage, and has equipped programmers, sellers and supply chain workers with AI tools. Microsoft said it has seen results from those tools while also working to staff up on talent for new growth areas.