Microsoft offers 60,000 employees severance to leave, including some VPs

Microsoft is asking roughly a quarter of its employees whether they would like to leave, and paying the ones who say yes. The company’s new Voluntary Exit Offer reaches from junior staff up to general managers and some employees with vice-president titles, and it comes with no age test, no tenure test and no link to performance reviews.

For anyone who works in an office, the novelty is who makes the call. Big Tech has thinned its ranks through layoffs, tougher reviews and return-to-office mandates, all decided over workers’ heads. Microsoft is handing part of that decision to the workers themselves, while its spending on AI data centers keeps climbing.

A severance check instead of a pink slip

Microsoft says about 60,000 people are eligible, roughly 27% of a workforce of 223,000. That headcount was already down from 228,000 a year earlier, according to the company’s annual filings, and it was counted before Microsoft announced 4,800 layoffs in July, about 2% of its global staff.

The package matches Microsoft’s standard severance: base pay scaled to tenure and level, continued stock vesting, health coverage for a fixed period and career transition services, according to GeekWire. It leaves out the extended healthcare that made the company’s spring retirement program attractive. In a memo to staff, chief people officer Amy Coleman said the offer gives employees considering a future outside the company “a new choice to make that transition now with support.”

It is far wider than that first attempt. The retirement program, the first in Microsoft’s history, was limited to US employees at senior-director level and below whose age plus years of service crossed a threshold. About 30% of the roughly 8,750 people eligible took it, and Microsoft booked a $900 million charge for it. The new offer covers the United States, Canada, the United Kingdom and India, and only in teams whose leaders opted in. Sales, some engineering groups and parts of the data-center and marketing teams are sitting it out. Microsoft staff in continental Europe, Japan or Latin America are not part of it.

The data-center bill behind the offer

Microsoft told investors in July that capital spending for the September quarter would exceed $50 billion, against $34.9 billion a year earlier, as it builds data centers supplying cloud computing to OpenAI, Anthropic and other companies. It still produced $19.64 billion of free cash flow in the June quarter, when Alphabet and Amazon both reported negative figures, but that was 23% less than a year before. Like its peers, it is under investor pressure to hold down operating costs while that bill rises.

Why “voluntary” does not settle the question

Microsoft says the offer is not a sign that it needs fewer employees, and that it does not replace layoffs, which remain an option depending on business conditions. A company does not invite a quarter of its people to leave unless it is ready for some of them to go. A voluntary scheme also hands the choice to the employees most confident of finding work elsewhere, rather than to managers deciding which skills the company needs next. Microsoft has set no target, and told GeekWire it expects a much smaller share to accept than the 30% who took the retirement deal.

The rest of the industry has been cutting the old way. Meta laid off about 8,000 people in May, Amazon announced 16,000 job cuts in January and Netflix is shedding about 1,000 roles. Coleman has said Microsoft is studying whether to make voluntary exits a regular, possibly annual, part of how it manages its workforce.

Eligible employees have until the first week of December to decide, and those who accept will leave on December 31. Microsoft reports quarterly results on Wednesday afternoon, October 28, and GeekWire noted the release could include a first estimate of what the offer will cost.

For about 60,000 people, the question Microsoft normally answers in a layoff memo is now sitting in their own inbox.

Tags: microsoft, AI infrastructure, layoffs, Severance, tech jobs, Amy Coleman