Microsoft launches first-ever voluntary buyout as AI spending hits $80 billion

Microsoft to offer 7% of staff voluntary redundancy for the first time

Microsoft is offering voluntary redundancy to about 7 per cent of its workforce, in a first for the 51-year-old tech giant as it wrestles with headcount amid an expensive AI bet. The cloud giant on Thursday told employees that it would offer the option to long-serving employees whose years of service plus age total 70 or more. More than 8,000 employees will be eligible out of the group's 125,000-strong US workforce. "Many of these employees have spent years, and in some cases, decades, shaping Microsoft into what it is today," Amy Coleman, Microsoft's chief people officer, wrote in a memo seen by the FT. She said the offer was intended to give these employees "the choice to take that next step . . . with generous company support". The scheme follows the company's decision to dismiss more than 15,000 employees last year and comes as it has committed to spend $140bn in capital expenditure in its fiscal year, which ends in June. It marks the first time Microsoft has offered voluntary redundancies. The company declined to comment. Other tech groups, including Amazon, Oracle and Meta, have undertaken sweeping lay-offs since the beginning of last year, attributing the move to a desire to streamline their workforce. These groups have massively increased AI spending, shifting resources away from other parts of their business. Job cuts linked to AI have become an increasingly powerful phenomenon across the US labour market, prompting concern about the technology's impact on employment. Fintech group Block went as far as axing "nearly half" its workforce, saying AI could supplement the lost roles. Microsoft's shares have slipped roughly 14 per cent this year, lagging several peers, with investors raising doubts about its ability to successfully commercialise some of its AI investment. The company is due to post its quarterly earnings next week. The Redmond, Washington-based group is racing to build out data centre capacity to serve large customers including Anthropic and OpenAI. The group's software business is also at risk of encroachment by these start-ups. Microsoft's internal AI model-building efforts have floundered relative to the likes of Google, with the group yet to unveil a frontier model. The company has largely relied on OpenAI for the AI models that underpin its services but has argued that it must develop its own. Mustafa Suleyman, Microsoft's AI chief, told the FT this year that his "superintelligence" team was pursuing "true self-sufficiency" from OpenAI but would not have access to the necessary data centre capacity for a frontier system until later this year.

Microsoft's first voluntary retirement offer is a buyout dressed as a benefit

Summary: Microsoft is offering voluntary retirement to approximately 7% of its US workforce (~8,750 of 125,000 employees) in the first such programme in its 51-year history, using a "Rule of 70" formula (age + years of service). The offer, disclosed by CPO Amy Coleman, targets senior director level and below, with details arriving 7 May and a 30-day window. It follows 15,000+ layoffs in 2025, a March 2026 hiring freeze (AI teams exempt), and comes as Microsoft spends $80B+ on AI infrastructure while reporting $81.3B quarterly revenue. Microsoft is offering voluntary retirement to approximately 7% of its US workforce, roughly 8,750 employees out of 125,000, in the first programme of its kind in the company's 51-year history. The offer, announced in an internal memo on Wednesday by Amy Coleman, the company's chief people officer, uses what Microsoft calls the "Rule of 70": employees at the senior director level and below whose age plus years of service equal 70 or more are eligible. Workers on sales incentive plans are excluded. Eligible employees will receive details on 7 May and have 30 days to decide. The package includes a financial payout and extended healthcare. Coleman wrote that "our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support." The word "voluntary" is doing considerable work in that sentence. Microsoft eliminated more than 15,000 positions in 2025, including roughly 9,000 in a single round in July and 6,000 in May. In March 2026, it froze hiring in its Azure cloud and North American sales divisions while explicitly exempting AI and Copilot teams from the freeze. The voluntary retirement programme is a softer instrument than a layoff notice, but it arrives in the same sequence and serves the same strategic purpose: making the company smaller in the places where it does not need to be large, and redirecting the savings toward the places where it does. Microsoft is not struggling. Its most recent quarter, the second of fiscal year 2026, reported $81.3 billion in revenue, up 17% year over year, with operating income of $38.3 billion, up 21%. Net income rose 60% to $38.5 billion. Microsoft Cloud revenue passed $51.5 billion, with Azure growing 39% in constant currency. The company returned $12.7 billion to shareholders through dividends and buybacks in the quarter alone, a 32% increase. Third-quarter results are due on 29 April, with revenue guidance of $80.65 billion to $81.75 billion. The number that sits alongside those profits is $37.5 billion in capital expenditure in a single quarter, up 66% year over year, nearly all of it directed at AI infrastructure. Microsoft has committed more than $80 billion to AI data centres and compute capacity. Satya Nadella has described the company's 220,000-plus headcount as a "massive disadvantage" in the AI race, a remarkable statement from the chief executive of one of the world's most valuable companies. The voluntary retirement programme is one answer to that diagnosis: reduce the denominator without the headlines that come with mass layoffs. Microsoft is not doing this alone. Oracle eliminated up to 30,000 employees in March to fund AI data centres, delivering the news via 6 a.m. emails with no warning. Meta plans to cut 8,000 jobs on 20 May as part of its AI restructuring, while simultaneously doubling its AI infrastructure spending to between $115 billion and $135 billion. Atlassian cut 1,600 jobs and replaced its chief technology officer with two AI-focused executives. Amazon signalled roughly 30,000 cuts in the first half of 2026 across Alexa, AWS, and Prime Video. By April, more than 95,000 tech workers had lost their positions across 249 companies in 2026, with an estimated 44% of those reductions directly or indirectly linked to AI automation. In the first quarter alone, 78,557 jobs were eliminated. The mechanics differ. Oracle's approach was blunt and immediate. Meta's is phased, with a second wave planned for the second half of the year. Microsoft's is the most unusual: genuinely voluntary, targeted by tenure and age rather than division or performance, and accompanied by a 30-day decision window rather than a walk-to-the-door escort. The Rule of 70 formula means the programme disproportionately affects long-tenured employees in their fifties and sixties, the people who built the pre-AI Microsoft and whose institutional knowledge is hardest to replace but whose roles are, in the company's calculus, most susceptible to automation or elimination. The hiring freeze exempts AI teams. AI and machine learning engineering roles carry a 56% wage premium over comparable non-AI positions. The company is spending $80 billion on infrastructure while offering buyouts to the people who maintain the systems that infrastructure is designed to replace. The trade-off is explicit and, within Microsoft's strategic logic, internally consistent: every dollar saved on headcount in enterprise sales, middle management, and legacy engineering is a dollar available for GPU clusters, model training, and Copilot development. Whether the logic holds depends on a question that AI is not eliminating roles so much as the organisational structures that justified them. A senior programme manager with 20 years of experience and a salary of $250,000 is expensive. If AI tools can automate 40% of the coordination, documentation, and status-reporting that programme management entails, the company does not need fewer programme managers; it needs different ones, or fewer layers of them. The voluntary retirement programme offers the most expensive employees a dignified exit. What it does not offer is a plan for what happens when the institutional memory walks out the door with them. The "AI-washing" of layoff announcements has become a pattern across the industry: companies invoke AI transformation as the rationale for workforce reductions that are, in many cases, driven by margin pressure, organisational bloat, or Wall Street expectations. Microsoft's case is harder to dismiss as pretextual than most. The company is genuinely spending at a scale that requires trade-offs. It reported $37.5 billion in capex in a single quarter. That money has to come from somewhere, and headcount is the largest controllable expense in a software company. But the fact that Microsoft is profitable, growing, and returning billions to shareholders makes the "we must cut to invest" argument less about necessity and more about allocation. The company can afford both. It is choosing not to. The programme's uptake will depend on the specific terms disclosed on 7 May and on the alternative: what staying at Microsoft looks like for a 55-year-old senior director in a company that has told its workforce, through every structural signal available, that the future belongs to AI engineers in their thirties. Coleman's memo also announced changes to stock compensation, giving managers more flexibility to reward high performers through adjusted stock awards decoupled from cash bonuses. The combination of a voluntary exit ramp for tenured employees and performance-linked equity for those who remain is a coherent, if cold, personnel strategy. It says: we will pay you to leave, and we will pay the people who stay to work harder. Guggenheim reaffirmed its buy rating on Microsoft on Wednesday. Citi lowered its price target from $635 to $600 but maintained its buy recommendation, viewing fundamentals as "improving." The market's judgment, for now, is that a leaner Microsoft is a better Microsoft. The 8,750 employees eligible for voluntary retirement may reach the same conclusion, or they may decide that 51 years of precedent was broken for a reason, and that the next round will not be voluntary.

Microsoft is making this first-ever move to cut workforce size amid the AI shift

Microsoft is offering voluntary buyouts to select employees, it announced in a memo on Thursday, CNBC reported. The move is a first for the company, as the tech industry at large faces shifts in the era of artificial intelligence. The program will be available to U.S. workers at the senior director level and below whose employment years and age add up to at least 70. Employees with sales incentive plans are ineligible. Those who qualify and their managers will receive more information on May 7, according to the memo. The plan is expected to take effect in the fourth quarter of Microsoft's fiscal year 2026, which ends June 30. About 7% of the U.S. workforce is expected to qualify, according to Bloomberg. This move comes on the heels of massive layoffs across the industry, including several rounds at Microsoft itself. As tech giants like Microsoft, Alphabet, and Amazon increase spending on data centers to support rapidly advancing generative AI demands, many are making moves to cut costs elsewhere.

Microsoft offers voluntary employee buyouts for first time as it ramps up AI spending

Microsoft is planning its first voluntary employee buyout in the Windows maker's 51-year history, CNBC reported Thursday, citing a memo. Like other US tech giants, Microsoft has been spending aggressively on artificial intelligence. But adoption of one of its flagship AI services, the 365 Copilot, has reached just slightly over 3% of its total 450 million 365 customers. The one-time retirement program will be open to US workers at the senior director level and below, with a combined age and years of employment of 70 or more, CNBC reported. "Our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support," Amy Coleman, Microsoft's executive vice president and chief people officer, wrote in the memo viewed by CNBC. The company is changing how it distributes stock to employees for annual rewards and managers will no longer be required to tie stock directly to cash bonuses, CNBC said. Microsoft is also simplifying the manager review process, reducing pay options from nine to five. Microsoft declined to comment when contacted by Reuters. Slowing cloud unit growth and investor concern over its heavy reliance on OpenAI have made Microsoft one of the worst-performing Big Tech stocks this year, with its shares tumbling nearly 24% from January to March - the biggest quarterly drop since 2008. The company in March unified the commercial and consumer versions of Copilot in a restructuring that now has Mustafa Suleyman, an industry veteran and Microsoft's AI chief, focusing solely on building new AI models - an area where analysts say the software giant has lagged its rivals. The move is part of a series of wider changes at the company, including CEO Satya Nadella in October handing oversight of some marketing and operations to Judson Althoff, CEO of Microsoft's commercial business, to sharpen his focus on the AI efforts.