Microsoft Launches First-Ever Voluntary Buyout Program Amid AI-Driven Workforce Restructuring

Microsoft is launching a voluntary buyout program for select employees, the company revealed in an internal memo obtained by CNBC on Thursday. This initiative marks the first time the tech giant has offered such a program, reflecting broader industry adjustments in response to the rapid evolution of artificial intelligence.

The buyout program will be open to U.S.-based employees at the senior director level and below, provided their combined age and years of service total at least 70. Employees participating in sales incentive plans are excluded from eligibility. Those who qualify, along with their managers, will receive further details on May 7.

The program is scheduled to take effect in the fourth quarter of Microsoft’s fiscal year 2026, which concludes on June 30, 2026. Approximately 7% of Microsoft’s U.S. workforce is expected to meet the eligibility criteria, according to Bloomberg.

Industry-Wide Layoffs and Cost-Cutting Measures

This announcement follows a wave of layoffs across the tech sector, including multiple rounds at Microsoft. As companies like Microsoft, Alphabet, and Amazon ramp up spending on data centers to meet surging demand for generative AI technologies, many are seeking to offset costs through workforce reductions.

Microsoft’s stock performance has reflected investor concerns over its AI investments. The company’s shares declined by 17% in February, raising questions about the financial impact of its AI initiatives.

Internal Restructuring to Prioritize AI Initiatives

Microsoft has undertaken significant internal restructuring to align its workforce with its AI ambitions. In October, CEO Satya Nadella delegated additional marketing and operations responsibilities to Judson Althoff, CEO of Microsoft’s commercial business, to enable a stronger focus on AI development.

In March, Microsoft unified the commercial and consumer versions of its AI assistant, Copilot, and reassigned Mustafa Suleyman, head of AI at Microsoft, to concentrate exclusively on building new AI models.

Changes to Employee Rewards and Performance Reviews

Microsoft is also modifying its approach to employee compensation and evaluations. Managers will no longer be required to link stock awards directly to cash bonuses, providing greater flexibility to reward top performers. Additionally, the company is simplifying the manager review process to streamline performance assessments.