Microsoft offers exit deals to 60,000 workers to balance AI spending
The company is extending voluntary buyouts to staff in four countries, affecting nearly a third of its workforce, as it tries to manage the costs of its massive data center build-out.
By Josephine Clarke ·
Microsoft is offering voluntary buyouts to approximately 60,000 employees to manage the rising costs of its artificial intelligence infrastructure. The software giant announced the new exit offer on Monday, targeting workers in the United States, Canada, India, and the United Kingdom. This initiative covers staff at experience level 70 and below, representing about 27% of the company's total 223,000-person workforce.
The move comes as Microsoft ramps up spending to meet high demand for AI computing services. The company supplies cloud services to major clients including Anthropic and OpenAI. Capital expenditures for the September quarter are expected to exceed $50 billion, a sharp increase from the $34.9 billion spent in the same period last year. This surge in infrastructure investment has placed pressure on the company's financial profile, prompting earlier moves to reduce headcount.
Amy Coleman, the company's executive vice president and chief people officer, described the offer as a way to give employees more flexibility. In a memo to staff, Coleman stated that the program builds on lessons learned from a voluntary retirement program launched in April. That earlier initiative was available to roughly 7% of U.S. employees. In July, the company also announced plans to lay off 4,800 workers as part of a broader effort to align its talent pool with new growth opportunities.
Microsoft is shifting its business model to charge clients based on actual AI usage. The company has provided AI tools to programmers, sales teams, and supply chain workers, reporting noticeable results from these changes. While cloud rivals Alphabet and Amazon reported negative free cash flow in the second quarter, Microsoft maintained positive free cash flow of $19.64 billion. However, that figure represents a 23% decline from the previous year, reflecting the strain of heavy capital investment.
Some marketing, sales, and engineering teams have opted out of the new buyout, according to a person familiar with the matter. Employees must decide whether to accept the offer by early December, with participating workers leaving the company on December 31. The new offer extends to the vice president level, whereas the earlier retirement program was limited to the senior director level. More than 30% of eligible employees joined the previous program, but Microsoft has not set a specific participation target for this round.
The company is scheduled to report its third-quarter financial results on Wednesday.
Source: CNBC
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