Microsoft Offers Buyouts to Employees as AI Changes Landscape
SAN JOSE: Microsoft is introducing voluntary buyouts for certain employees in the U.S. This marks the first time the tech giant has taken such a step in its 51-year history, as it responds to the rapid development of artificial intelligence (AI).
The one-time retirement program is available to eligible workers at the senior director level and below, who have a combined age and years of service of at least 70. A source indicates that around 7% of Microsoft’s U.S. workforce meets these criteria.
Details about the program will be shared with employees on May 7; however, those on sales incentive plans will not be eligible for this offer.
This initiative coincides with Microsoft’s increased investment in data centers to keep up with the growing demand for AI-powered cloud services. Other major companies, like Alphabet and Amazon, are experiencing similar trends.
The software industry is facing its own set of challenges, especially as new AI coding tools from companies like Anthropic disrupt traditional business models. Microsoft has also been focused on cost-cutting measures, having conducted several layoffs last year. By June 2025, the company employed approximately 228,000 people globally, with about 125,000 based in the U.S.
In addition to the buyout offers, Microsoft is changing its employee compensation structure. Managers will no longer need to link stock awards directly to cash bonuses, allowing for greater flexibility in recognizing employee performance. The company is also simplifying its performance review system, reducing the number of pay options for managers from nine to five.
These changes reflect Microsoft’s commitment to streamline operations and adapt to the evolving landscape as it prepares for growth in the AI era.
In related news, Meta, the parent company of Facebook and Instagram, plans to cut 10% of its workforce next month while heavily investing in AI technologies. Reports suggest that these layoffs will occur on May 20, potentially affecting nearly 8,000 of the company’s nearly 79,000 employees. Furthermore, around 6,000 open positions will remain unfilled. The company aims to improve efficiency and manage its expenses amid these transitions, with capital investments in AI expected to reach between $115 billion and $135 billion this year.
