microsoft announced Monday that it will offer buyouts to a wide range of employees to balance capital efficiency with building expensive artificial intelligence infrastructure.
The software maker has announced a new voluntary redundancy offer for certain workers below experience level 70 in the US, Canada, India and the UK.
Approximately 60,000 people will be affected, said the person, who requested anonymity because they were discussing an internal matter. The initiative will affect about 27% of Microsoft’s 223,000 employees.
Microsoft is increasing spending on data centers to keep up with the high demand for AI computing, providing cloud services to companies like Anthropic, OpenAI, and many others. That put a strain on Microsoft’s finances. In April, the company announced its first-ever voluntary retirement program, which will cover about 7% of its U.S. employees. And in July, Microsoft announced plans to lay off 4,800 employees.
“The voluntary severance offer reflects an important part of how we are evolving our approach to change: increasing flexibility and, where possible, creating more ways for employees to shape their next chapter,” Amy Coleman, Microsoft’s executive vice president and chief human resources officer, wrote in a memo to employees. “This builds on what we learned through our voluntary retirement program earlier this year.”
Microsoft is in the midst of a business model transformation, increasingly trying to charge customers based on the amount of AI they actually use. We provided AI tools to programmers, sellers, and supply chain workers and observed remarkable results. At the same time, the 51-year-old maker of Windows and Office wants to ensure it has the right talent to pursue the most attractive new growth opportunities.
The idea is to accomplish the transition without weakening Microsoft’s financial position. While cloud rivals Alphabet and Amazon both reported negative free cash flow in the second quarter, Microsoft had positive free cash flow of $19.64 billion in the period, down 23% from a year ago.
Some marketing, sales and engineering teams have decided not to participate in the new acquisition, the person said. Employees will have to decide whether to accept the offer in early December, and participants plan to leave on Dec. 31, the person added.
Microsoft announced in July that more than 30% of people who were eligible to participate in the voluntary retirement program had done so. But while it is open to those below the senior director level, the new initiative extends to the higher vice president level, said people briefed on the new plan. The person said Microsoft does not have a target in mind this time.
Microsoft is scheduled to announce its third quarter results on Wednesday.
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