Microsoft extends voluntary exit offer to 60,000 employees

Microsoft is offering voluntary exit packages to approximately 60,000 employees. The move affects workers in the United States, Canada, India, and the United Kingdom who hold an experience level of 70 or below. This group represents roughly 27% of the company's total workforce of 223,000 people.

The buyout option is a response to the high cost of building artificial intelligence infrastructure. Microsoft stated that it must balance these expenses with capital efficiency. The company is spending heavily on data centers to handle computing demand for its own services and clients like Anthropic and OpenAI. Capital expenditures for the September quarter are expected to exceed $50 billion, a sharp increase from $34.9 billion in the same period last year.

This financial pressure has already led to other personnel changes. In April, Microsoft introduced a voluntary retirement program available to about 7% of its U.S. staff. In July, the company announced layoffs affecting 4,800 employees. The new buyout offer expands eligibility to higher levels than the previous retirement program, reaching the vice president level rather than stopping at the senior director level of 67.

Amy Coleman, Microsoft's executive vice president and chief people officer, addressed the change in a memo to staff. She described the offer as part of an evolving approach to change that creates greater flexibility for employees. Coleman noted that the program builds on lessons learned from the earlier voluntary retirement initiative.

Microsoft is also shifting its business model to charge clients based on actual AI usage. The company has implemented AI tools for programmers, sales teams, and supply chain workers, reporting noticeable results. These changes aim to ensure the organization has the right talent for new growth areas without weakening its financial position. While rivals Alphabet and Amazon reported negative free cash flow in the second quarter, Microsoft maintained $19.64 billion in positive free cash flow, though that figure dropped 23% from the previous year.

Some marketing, sales, and engineering teams have chosen not to participate in the new buyout. Employees must decide whether to accept the offer by early December. Those who participate will leave the company on December 31. Microsoft has not set a specific target number for the new program, unlike the earlier initiative where more than 30% of eligible employees retired.

The company is scheduled to report its third-quarter financial results on Wednesday.