Microsoft extends exit package to 60,000 staff in AI cost push

Microsoft has opened the door for nearly a third of its workforce to leave with a payout, a move designed to manage the financial weight of its artificial intelligence expansion.

The company announced on Monday that it is extending a voluntary exit offer to eligible workers in the United States, Canada, India, and the United Kingdom. The package applies to staff at experience level 70 or below. According to a person familiar with the internal matter, approximately 60,000 employees are eligible for the offer. This group represents roughly 27% of Microsoft's total workforce of 223,000 people.

The decision follows a steep increase in capital spending. Microsoft stated in July that capital expenditures for the September quarter would exceed $50 billion. That figure stands in sharp contrast to the $34.9 billion spent on capital and finance leases in the same quarter a year prior. The surge in costs is driven by data center construction to support cloud services for partners such as Anthropic and OpenAI.

This is the second major workforce adjustment for the company this year. In April, Microsoft launched a voluntary retirement program that about 7% of U.S. employees could use. In July, the firm announced a plan to lay off 4,800 staff members. Amy Coleman, the executive vice president and chief people officer, wrote in a memo to employees that the new offer aims to create greater flexibility. She noted that the initiative builds on lessons learned from the earlier retirement program.

The company is shifting its business model to charge clients based on actual AI usage. Microsoft has deployed AI tools to its programmers, sales teams, and supply chain workers, citing noticeable operational results. The goal is to align talent with new growth opportunities while preserving the company's financial health. In the second quarter, Microsoft reported $19.64 billion in positive free cash flow, a 23% year-over-year decline. That result kept the company ahead of rivals Alphabet and Amazon, which both reported negative free cash flow for the same period.

Eligible employees must accept or decline the offer by early December. Those who participate will depart on December 31. Some marketing, sales, and engineering teams have opted out of the program, the source noted. The previous retirement program was limited to staff at the senior director level 67 and below. The current offer extends to the vice president level. Microsoft has not set a specific target number of departures for this round. The company is scheduled to report third-quarter financial results on Wednesday.

The move reflects a strategic effort to control costs without halting investment in AI infrastructure.