Microsoft is making this first-ever move to cut workforce size amid the AI shift

Microsoft is offering voluntary buyouts to select employees, it announced in a memo on Thursday, CNBC reported. The move is a first for the company, as the tech industry at large faces shifts in the era of artificial intelligence.

The program will be available to U.S. workers at the senior director level and below whose employment years and age add up to at least 70. Employees with sales incentive plans are ineligible. Those who qualify and their managers will receive more information on May 7, according to the memo. The plan is expected to take effect in the fourth quarter of Microsoft’s fiscal year 2026, which ends June 30.

About 7% of the U.S. workforce is expected to qualify, according to Bloomberg.

This move comes on the heels of massive layoffs across the industry, including several rounds at Microsoft itself. As tech giants like Microsoft, Alphabet, and Amazon increase spending on data centers to support rapidly advancing generative AI demands, many are making moves to cut costs elsewhere.

Microsoft has been one of the worst-performing Big Tech stocks so far this year. The company was down 17% in February, raising concerns about AI spending.

Internally, Microsoft has restructured personnel to focus on the company’s AI goals. In October, CEO Satya Nadella handed some marketing and operations oversight to Judson Althoff, CEO of Microsoft’s commercial business, to allow him to focus on AI efforts. In March, the commercial and consumer versions of Copilot unified, and Microsoft’s AI chief Mustafa Suleyman is now focused solely on building new AI models. 

At the same time, the company is changing how annual rewards are distributed. Managers will no longer be required to tie stock directly to cash bonuses, allowing them more freedom to reward high-achieving employees. Microsoft is also simplifying the manager review process.

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