For the first time in its 51-year history, Microsoft is offering a one-time voluntary retirement program to select employees, sparked by the massive AI boom.
US workers at the senior director level and below whose years of employment at the company and age add up to 70 or higher will be eligible for the retirement program, according to a company memo released on Thursday, as reported by CNBC. This represents an estimated 7% of Microsoft’s 125,000-person US workforce, or about 8,750 employees.
Eligible employees and their managers will be notified on May 7 and will have 30 days to respond. People with sales incentive plans cannot participate.
With AI now at the forefront of many companies’ tech initiatives, Microsoft has been increasing its spending on compute power in data centers to satisfy client demand for generative AI models.
Program geared at veteran staff
The memo to employees from Chief People Officer Amy Coleman framed the one-time program as an offering for long-time staff.
“Many of these employees have spent years, and in some cases, decades, shaping Microsoft into what it is today,” Coleman wrote, according to GeekWire. “Our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support.”
Coleman also outlined changes to Microsoft’s compensation system, reducing the number of pay levels from nine to five. The software giant is also separating stock awards from bonuses, giving managers flexibility to use stock to reward long-term contributors. With this approach, “managers have more flexibility to meaningfully recognize high performance,” Coleman wrote.
Those who accept the deal are not expected to have any restrictions placed on them for future employment.
Layoffs continue to steamroll through companies
While voluntary retirement programs are common in more traditional industries such as manufacturing and telecom, tech giants have instead opted for layoffs, more stringent performance reviews, and return-to-office policies as ways to trim staff.
- Last year, Microsoft laid off more than 15,000 employees, including 9,000 in July. The company began requiring staff in Seattle to return to the office three days a week in February.
- A slew of tech companies have announced layoffs in the past year, including Snap and Oracle earlier this month.
- This week, Meta said it was preparing another round of layoffs, up to 8,000 jobs.
- Amazon sounded the death knell for 16,000 workers in January. Many have cited increasing plans for AI as the reason.
Even non-tech companies like Disney are laying off workers as they shift toward a more tech-focused, automated future.
For more on the AI infrastructure shift behind this move, read our coverage of OpenAI’s Stargate pullback and Microsoft’s data center expansion.
