Abstract:
In order to adjust its workforce and further reduce costs in the AI era, Microsoft will provide voluntary severance compensation packages to approximately 60,000 employees. A Microsoft spokesperson said employees at the vice president level and below on select teams in the U.S., Canada, India and the U.K. will be eligible. Some business unit employees are not included in the plan, including some working in data centers, sales and marketing.
Microsoft Chief People Officer Amy Coleman said in a notice to employees on Monday: "This program provides a new option for employees who may be considering leaving the company to pursue other development opportunities in the future. They can complete this transition now with the support of the company." The spokesperson said that employees who choose to voluntarily leave will receive benefits similar to standard severance packages.
The world's largest software maker has cut tens of thousands of employees through multiple rounds of layoffs in recent years. In July this year, Microsoft offered a voluntary severance package to employees who reached retirement age, and more than 30% of approximately 8,750 eligible employees accepted this package. A spokesman said Microsoft expects a much lower percentage of employees to accept the latest voluntary separation package compared with this voluntary retirement plan.
As of the end of June, the total number of Microsoft employees was 223,000. Since 2022, this number has remained essentially flat. Around that time, Microsoft began investing heavily in AI and data centers, squeezing budgets and hiring space in other parts of the company.
As businesses shift spending toward AI infrastructure, other companies are also looking to shrink their workforces. Google reportedly launched voluntary severance programs across multiple departments last year. Meta’s headcount has dropped by more than 20,000 from its peak at the end of 2022.
Earlier this year, Business Insider reported that a Google executive told employees in his department that if they could not "fully commit" to AI, they could choose a voluntary severance package.
When employees decide whether to accept a voluntary severance package, they usually consider their savings and whether they face the risk of being laid off in the future. Mid-career professionals also consider job market conditions, the time it may take to find a new job, and whether compensation packages provide enough buffer for career transitions. Such programs are usually aimed at employees with more seniority and higher costs, as was the case with Microsoft's previous early retirement programs, and the compensation terms are usually more generous than layoffs.
The spokesperson said that in some cases, if outstanding employees choose to accept voluntary separation packages, Microsoft will try to retain them.
Coleman wrote in the notice that this voluntary severance package "provides another way for Microsoft's business units to adjust their workforce based on changing needs."
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