Microsoft Plans to Offer Voluntary Severance to About 60,000 Employees as $175 Billion AI Investment Highlights Cost Pressure

TradingKey - Microsoft (MSFT) announced on Monday that it is offering voluntary severance packages to select employees in the U.S., Canada, India, and the U.K., with approximately 60,000 workers eligible, accounting for 27% of its global workforce. As it invests heavily in AI infrastructure, Microsoft is controlling costs by adjusting its workforce structure to preserve financial flexibility for its business transformation.

According to people familiar with the matter, Microsoft has not set a target headcount for departures. Employees must decide whether to accept the offer by early December, and participants will depart on December 31.

The new program is reportedly open to eligible employees at internal level 70 and below, extending up to the vice president level, and offers financial compensation alongside career planning resources. Amy Coleman, Microsoft's Chief People Officer, stated in an employee memo that the program provides a new option for employees considering leaving the company.

Following the announcement, Microsoft's stock price rose 1.45% to $532.13.

Microsoft stock price chart, Source: TradingView

This marks the second time this year that Microsoft has introduced a voluntary departure arrangement. The previous voluntary retirement program covered approximately 7% of U.S. employees, extending up to the senior director level. Microsoft disclosed in July that more than 30% of eligible employees chose to participate. In the same month, the company also announced about 4,800 job cuts, including a significant number of Xbox division employees.

As of the end of June, Microsoft's total global workforce stood at 223,000, down from 228,000 at the end of 2025. However, this program does not cover all departments. According to Bloomberg, citing a company spokesperson, certain roles in data centers as well as sales and marketing are not eligible; other people familiar with the matter said some engineering teams are also excluded.

This indicates that while trimming labor costs, Microsoft still aims to retain staff essential to supporting AI infrastructure development and business growth.

Behind the workforce reductions lies the company's intensified commitment to AI investments. Microsoft Chief Financial Officer Amy Hood stated during the July earnings call that the company expects AI infrastructure spending to reach $175 billion in 2026, including data center investments. Microsoft is expanding its computing power to provide cloud services for customers such as Anthropic and OpenAI.

The massive capital outlay has also drawn attention to cash returns. In the second quarter of 2026, Microsoft's free cash flow stood at $19.64 billion, remaining positive but declining 23% year-over-year. Employee participation in the voluntary departure program could help lower future labor costs; however, the ultimate savings will depend on the participation rate, and severance expenditures will also impact short-term earnings, with insufficient data currently available to quantify the net effect.