Microsoft offers buyouts to 60,000 workers as AI reshapes its staff

Microsoft is offering voluntary buyouts to around 60,000 employees in the US, UK, Canada and India. It is the first time the company has made such an offer to this many people. Earlier this year, a retirement offer went to only about 9,000 workers. The new offer is part of an effort to cut costs without cutting spending on AI infrastructure.

What changed

Microsoft has long done layoffs, but they used to be yearly. Now they come every few months. Just months ago, the company laid off 4,800 people, with Xbox and commercial sales teams hit hardest. Last July it cut 4 percent of its workforce. The new buyout offer reaches roughly a quarter of all employees.

Headcount is now falling. Microsoft had about 223,000 employees on June 30, down 5,000 from 228,000 the year before. It is the first yearly drop in a decade.

The AI link

CEO Satya Nadella described the plan almost two years ago on a podcast. "Our total people costs will go down, our cost per head will go up, and my GPU per researcher will go up," he said. A GPU is a type of computer chip that powers AI. In plain terms: fewer people, higher pay for those who stay, and more AI computing power for each of them.

Some insiders agree. Merill Fernando, a former Microsoft product manager, said the company "needs fewer people." He pointed to many small teams, layers of management and silos that make it hard to act together.

What the offer includes

• Cash based on time at the company
• Faster vesting of stock awards
• Some extra subsidized health coverage
• Several months of career services

Sources say this is practically the same as Microsoft's regular severance terms. That matters because more than 30 percent of the 9,000 workers accepted the earlier retirement offer. Far fewer are expected to take this one.

What happens next

Eligible workers have until December to decide, so the real impact will not be known for a while. Even if only 5 percent say yes, that is 3,000 people. There are also rumors of more layoffs in November and January. How many accept the buyout will likely shape the size of those cuts.

Why it matters beyond Microsoft

Microsoft sells the AI tools many companies use. Now it is planning its own workforce around them. Other employers may follow and ask what AI can do before they open a new job. For workers, that could mean fewer openings in some roles and higher expectations for those who stay.