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Microsoft Offers Buyouts to 60,000 as AI Costs Climb
Microsoft offered voluntary buyouts to about 60,000 employees, roughly 27% of its workforce, CNBC reported. The offer lands as AI spending squeezes free cash flow.
Microsoft is asking a large part of its staff whether they want to leave. On Monday, October 26, the company announced a Voluntary Exit Offer for employees at experience level 70 or below in the United States, Canada, India and the United Kingdom, and about 60,000 people are eligible, roughly 27% of its 223,000-strong workforce, a person familiar with the matter told CNBC. Employees have until early December to decide, and those who accept leave on December 31. Some marketing, sales and engineering teams opted out, and the company has set no participation target.
It is the second such programme this year. In April Microsoft launched its first voluntary retirement programme, open to about 7% of US employees, and said in July that more than 30% of those eligible took it; it also planned 4,800 layoffs in July. The new offer reaches further up the ladder, to vice-president level, where the spring programme stopped at senior directors. "The Voluntary Exit Offer reflects an important part of how we're evolving our approach to change," chief people officer Amy Coleman wrote in a memo.
The finances explain why investors connected it to AI straight away. Microsoft's free cash flow in the previous quarter was $19.64 billion, down 23% from a year earlier, CNBC noted, and two days after the announcement the company reported quarterly capital spending, including finance leases, of $45.2 billion, against $34.9 billion a year earlier. Alphabet and Amazon both reported negative free cash flow for the same period. A company spending that much on data centres has a strong incentive to hold down the rest of its cost base, and payroll is the largest controllable item.
Microsoft disputes the link. A company spokesperson told Forbes that AI is not driving the buyouts, and Forbes estimated that the offer could lead to roughly 1,800 to 3,000 departures, a projection rather than a company figure. The company is also changing how it sells software, moving toward charging clients by how much AI they use, which changes which skills it needs. A voluntary offer lets employees, rather than managers, decide who leaves, which is cheaper in morale terms but less precise than targeted cuts.
For shareholders, the buyouts are a small item next to tens of billions in quarterly capex, but they show how the AI build-out is being paid for. Each of the large spenders has now chosen a mix of borrowing, selling stock, leasing chips and trimming costs; Microsoft, with positive free cash flow, has so far leaned on the last. How many people accept by December, and whether the offer is followed by layoffs, will show how much margin pressure the company expects next year.
Sources: CNBC — Microsoft offers voluntary buyouts to 60,000 employees as AI leads to efficiency push (Oct 26, 2026); Forbes — Voluntary Buyouts Let Employees Decide Who Leaves Microsoft (Oct 31, 2026); SiliconANGLE — Microsoft offers voluntary buyouts to 60,000 employees amid AI investments (Oct 26, 2026)