Microsoft pays 60,000 employees to leave so it can afford its AI data centers

Microsoft is offering voluntary exit packages to approximately 60,000 employees to balance its massive spending on artificial intelligence infrastructure with financial efficiency. The company announced the plan on Monday, targeting workers in the United States, Canada, India, and the United Kingdom who hold experience levels 70 or below.

The initiative covers roughly 27% of Microsoft’s total workforce of 223,000 people. The move comes as the company ramps up capital expenditures to build data centers capable of handling high AI computing demand for clients like OpenAI and Anthropic. Microsoft stated in July that capital expenditures for the September quarter would exceed $50 billion, a substantial increase from the $34.9 billion spent in the same period the previous year.

This latest offer follows a series of cost-management actions taken earlier this year. In April, Microsoft introduced a voluntary retirement program available to about 7% of U.S. employees. In July, the company announced plans to lay off 4,800 staff members. Amy Coleman, the company’s executive vice president and chief people officer, described the new offer in an internal memo as a way to create greater flexibility for employees to shape their next chapters.

Microsoft is shifting its business model to charge clients based on actual AI usage. The company has equipped programmers, sales staff, and supply chain workers with AI tools, reporting noticeable results. This strategy aims to align talent with new growth opportunities while preserving the company’s financial stability. In the second quarter, Microsoft reported $19.64 billion in positive free cash flow, a 23% decrease year over year, but still ahead of rivals Alphabet and Amazon, which both reported negative free cash flow for that period.

The new offer extends to a higher level than the earlier retirement program. While the April program was limited to employees at the senior director level, level 67, and below, this initiative includes those up to the vice president level. A person familiar with the matter said some marketing, sales, and engineering teams have chosen not to participate. Employees must decide whether to accept the offer in early December. Those who accept will depart the company on December 31.

More than 30% of eligible employees accepted the earlier voluntary retirement program, according to data released in July. Microsoft does not have a specific target number of participants for this new round. The company is scheduled to report its third-quarter financial results on Wednesday.