Microsoft offers buyouts to 7% US staff amid AI spending surge

Microsoft is offering voluntary retirement buyouts to thousands of employees in the United States, marking the first programme of this scale in the company’s history as it looks to manage costs while ramping up investment in artificial intelligence.

Around 7% of Microsoft’s US workforce will be eligible for the offer, according to reports from Bloomberg and CNBC.

Based on the company’s 125,000 US employees as of June 2025, this equates to roughly 8,750 workers.

The one-time programme was communicated to employees in a memo on Thursday.

It applies to staff at the senior director level and below whose combined age and years of service total 70 or more. Certain groups, including employees on sales incentive plans and some senior roles, are excluded.

First large-scale buyout programme

The initiative represents a shift in Microsoft’s workforce strategy. While the company has implemented multiple rounds of layoffs since early 2023, it has not previously used buyouts on this scale.

Eligible employees and their managers are expected to receive further details on May 7.

The programme is positioned as a voluntary option for long-serving staff to exit the company with support.

“Our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support,” wrote Amy Coleman, executive vice president and chief people officer at Microsoft in a memo.

In parallel, Microsoft is making changes to its compensation structure. The company will no longer require managers to tie stock awards directly to cash bonuses, allowing greater flexibility in recognising employee performance.

It is also simplifying its review process by reducing the number of pay options available to managers.

Cost pressures amid AI investment boom

The move comes as large technology companies face mounting cost pressures linked to heavy spending on AI infrastructure.

Microsoft is investing aggressively in data centres to support cloud computing demand driven by generative AI models.

The company recently announced plans to spend $18 billion on AI cloud and infrastructure in Australia, its largest investment in the country, following an earlier commitment of $10 billion over four years in Japan.

Peers across the sector are taking similar steps.

Oracle and Meta Platforms have also carried out sweeping job cuts over the past year, as companies balance rising capital expenditure with the need to control operating costs.

At the same time, the broader software sector is facing disruption from AI-driven tools, including coding technologies developed by firms such as Anthropic.

Workforce adjustments continue

Microsoft’s workforce stood at 228,000 employees globally as of June 2025, including 125,000 in the US.

The latest buyout programme adds to ongoing efforts to reshape its workforce in response to shifting industry dynamics.

Reducing headcount has been a common lever for large technology companies seeking to preserve margins while funding long-term AI initiatives. Microsoft’s approach now combines layoffs, voluntary exits, and adjustments to compensation structures.

KPMG also announced a 10% cut to its US audit partners today after previous attempts to encourage voluntary retirements were unsuccessful.