Microsoft Offers Voluntary Exit to 60,000 Staff as AI Infrastructure Spending Soars

Microsoft is giving about 60,000 employees a voluntary exit offer as the technology giant looks to bring down costs during its heavy investments in artificial intelligence infrastructure. The offer will reach roughly 27 percent of the company's workforce.

In a letter sent to employees on Monday, Microsoft's executive vice president and chief people officer Amy Coleman announced the Voluntary Exit Offer. According to the letter, eligible employees who want to leave the company will receive financial and career planning support.

"The Voluntary Exit Offer reflects an important part of how we're evolving our approach to change: creating greater flexibility and, where possible, more ways for employees to shape their next chapter," Coleman said in the letter.

Coleman's letter did not specify how many employees would receive the offer, but Bloomberg reported on Monday that Microsoft plans to offer buyouts to about 60,000 workers. A Microsoft spokesperson confirmed to Barron's that 60,000 employees will be eligible.

According to Microsoft's annual 10-K filing, the company employed approximately 223,000 people on a full-time basis as of June 30. The reported 60,000 figure therefore amounts to about 27 percent of its full-time workforce.

The offer will be available to eligible employees in the United States, Canada, the United Kingdom and India, at internal employment level 70 and below. Not every team is taking part; according to Bloomberg, some employees, including those in data centres and sales, are excluded. Bloomberg's reporting named teams including Xbox, Windows, Copilot and finance among those receiving offers.

Employees who accept will receive compensation packages similar to Microsoft's standard severance arrangements, along with career planning resources. Microsoft said it has not set a target for how many employees it wants to leave. The programme is time-limited and voluntary, so how many people actually depart depends on take-up.

Microsoft stock rose 1.1 percent to $530.50 on Monday, the day of the announcement.

Behind the move is Microsoft's rising spending on AI infrastructure. The company reported fiscal fourth-quarter capital expenditures of $41 billion in July, and analysts surveyed by FactSet expect fiscal first-quarter capital spending of $51 billion.

Microsoft has taken similar steps earlier this year. A voluntary retirement initiative was offered to approximately 9,000 workers, about one-third of whom accepted. The company subsequently announced plans in July to eliminate another 4,800 jobs.

Microsoft is scheduled to report earnings after the stock market closes on Wednesday. Wall Street will be watching closely to see what the company has to say about the voluntary offers and what they mean for its near- and long-term spending commitments.