Microsoft (MSFT.US) said on Monday that it will open a voluntary severance program to about 60,000 employees as a way to reduce costs, reshape its workforce structure and adapt its business layout to the artificial intelligence era.
A Microsoft spokesperson said eligible employees in parts of the United States, Canada, India and the United Kingdom can take part in the program, with the eligibility ceiling set at vice president level and below. That number exceeds one quarter of its total global workforce. People familiar with the matter said entire teams in Xbox, Windows, Copilot and finance are included in the plan, while some positions tied to data centers, sales, marketing, cybersecurity and quantum computing are not covered. Microsoft declined to comment on those details.
In a memo sent to employees on Monday, Chief People Officer Amy Coleman said: "For eligible employees who are already considering leaving the company and starting a new career path, this program offers a new option that allows them to make a smooth transition with supporting resources." The spokesperson added that participating employees can receive benefits benchmarked to the standard severance package.
As the world's largest software maker, Microsoft has already reduced headcount through multiple rounds of layoffs in recent years. In July, Microsoft launched a voluntary departure program for employees nearing retirement, and more than 30% of about 8,750 eligible employees chose to accept it. A Microsoft spokesperson expects the acceptance rate for this round of voluntary departures to be far lower than that of the earlier voluntary retirement program. As of the end of June, Microsoft had 223,000 employees. Since 2022, that figure has been broadly flat, and around 2022 was precisely when Microsoft began investing heavily in AI and data centers, which squeezed budgets and prompted the company to tighten hiring in other areas.
The company is scheduled to report first-quarter results after the U.S. market close on Wednesday, and it has forecast capital expenditure of $175 billion for calendar year 2026. Investors will be watching closely for signs that its huge AI spending is generating returns.
As funds continue to shift toward AI infrastructure, a number of technology companies are also streamlining their workforces. According to reports, Google (GOOGL.US) launched voluntary departure programs across multiple business units last year, while Meta (META.US) has cut its workforce by more than 20,000 people from its peak at the end of 2022. Both companies are also major investors in data center infrastructure.
A Microsoft spokesperson said the company wants to retain employees willing to tackle core hard problems. That stance is consistent with the tone of executives at other tech giants: those who want to stay must adapt to a faster pace of work and constant change. It is said that Elon Musk once gave Twitter employees a similar two choices in 2022: either deliver an extremely high-intensity work performance or take a severance package and leave. Earlier this year, it was reported that a Google executive told employees in their department that those unable to fully commit to the AI business could apply for voluntary severance compensation.
When deciding whether to accept a voluntary departure package, employees usually assess their own savings and the risk of being forced out later; middle-aged professionals also weigh the job market environment, the reemployment cycle, or whether the compensation can support them through a career transition. Voluntary departure programs are generally aimed at more senior employees with higher labor costs, as was the case with Microsoft's earlier early retirement program, and the compensation terms are usually better than those of involuntary layoffs. The spokesperson also mentioned that if core talent applies for voluntary departure, Microsoft will try to retain them as appropriate. Coleman wrote in the memo that the buyout program gives Microsoft departments "another way to adapt the workforce to changing needs."
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