Microsoft extends buyouts to 60,000 staff to manage AI costs

60,000 Microsoft employees are now eligible for voluntary exit packages, according to a person familiar with the matter. The offer targets 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.

Microsoft has increased spending on data centers to meet demand for artificial intelligence computing. The company supplies cloud services to firms such as Anthropic and OpenAI. Capital expenditures for the September quarter are expected to exceed $50 billion, up from $34.9 billion in the same period last year. This surge in costs has prompted financial adjustments over the past several months.

In April, the company announced its first voluntary retirement program, which was available to about 7% of U.S. staff. In July, Microsoft announced the layoff of 4,800 employees. The new buyout offer extends to a higher level than the retirement program. While the earlier initiative was open to those at senior director level 67 and below, the new package includes employees at the vice president level.

Amy Coleman, the company's executive vice president and chief people officer, wrote in a memo that the offer provides flexibility for employees to shape their next steps. She noted that the move builds on lessons learned from the earlier retirement program. The company aims to transform its business model by charging clients based on AI usage. It has deployed AI tools for programmers, sales teams, and supply chain workers to improve results.

Microsoft reported $19.64 billion in positive free cash flow in the second quarter, a 23% year over year decline. Rivals Alphabet and Amazon reported negative free cash flow during the same period. The company stated it has no specific target for the number of employees who will accept the new offer. More than 30% of eligible staff participated in the previous voluntary retirement program.

Some marketing, sales, and engineering teams have opted out of the new buyout, the person said. Employees must decide whether to accept the offer by early December. Those who participate will leave the company on December 31. Microsoft is scheduled to report third-quarter financial results on Wednesday.