Microsoft targets 60,000 employees for voluntary exit as AI costs climb

Microsoft announced on Monday that it is extending a voluntary exit package to approximately 60,000 employees, a move intended to offset the heavy costs associated with its artificial intelligence infrastructure expansion. The offer is available to U.S., Canadian, Indian, and U.K. workers holding experience level 70 or lower.

The group represents about 27% of Microsoft's total workforce of 223,000, according to a person familiar with the internal matter. This latest initiative follows a series of cost management actions earlier in the year. In April, the company introduced a voluntary retirement program that roughly 7% of U.S. employees could access. By July, Microsoft had also outlined plans to reduce its headcount by 4,800 through layoffs.

The financial pressure stems from a surge in capital expenditure. Microsoft said in July that spending for the September quarter would exceed $50 billion, a sharp increase from the $34.9 billion recorded in the same period a year prior. The company is building data centers to support cloud services for clients such as Anthropic and OpenAI, while also transitioning its own business model to charge clients based on actual AI usage.

Amy Coleman, Microsoft's executive vice president and chief people officer, addressed the staff in a memo. She described the offer as a way to provide greater flexibility for employees to shape their next chapters, noting that the plan builds on lessons learned from the earlier retirement program.

While some marketing, sales, and engineering teams have opted out of the new buyout, the decision deadline for eligible staff is set for early December. Those who accept the offer will depart the company on December 31. The new initiative reaches higher up the corporate ladder than the April program, extending to the vice president level, with no specific reduction target established.

Microsoft reported $19.64 billion in positive free cash flow in the second quarter, a 23% year-over-year decline. The company is scheduled to release its third-quarter financial results on Wednesday.