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A major shift is underway inside one of tech’s most influential giants as the Microsoft Employee Buyout program rolls out for the first time in the company’s 51-year history, signaling a strategic reshaping of its workforce amid the rapid upheaval driven by artificial intelligence.

Voluntary Exit Program Targets Select U.S. Employees

Microsoft will offer voluntary buyouts to a segment of its U.S. workforce, according to internal communications shared Thursday. Roughly 7% of U.S. employees are eligible, based on information from a person familiar with the plan.

The program applies to employees at the senior director level and below whose combined age and years of service equal 70 or more, a formula designed to identify long-tenured staff approaching retirement thresholds.

Eligible workers and their managers are set to receive full program details on May 7. Employees enrolled in sales incentive plans are excluded from participation.

AI Boom Reshapes Corporate Strategy

The move comes as Microsoft and its competitors accelerate massive investments in data centers to power generative AI systems that are reshaping the tech landscape.

Rivals including Alphabet Inc. and Amazon are also pouring billions into infrastructure expansion as demand for AI computing surges.

At the same time, traditional software firms are facing pressure from AI-driven coding tools developed by companies such as Anthropic, which are increasingly seen as disruptive forces to established business models.

Workforce Adjustments and Cost Controls

Microsoft has already gone through multiple rounds of layoffs over the past year as it trims expenses while reallocating resources toward AI development. As of June 2025, the company reported 228,000 employees globally, including 125,000 in the United States.

Amy Coleman said in an internal memo that the buyout program is designed to give employees flexibility and dignity in transition.

“Our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support,” she wrote.

Compensation and Performance System Overhaul

Beyond workforce reductions, Microsoft is also redesigning how it rewards and evaluates employees.

The company will change its stock award system so managers are no longer required to directly tie stock allocations to cash bonuses. Instead, leaders will have greater flexibility to reward high performers based on internal assessments.

Microsoft is also simplifying its performance review structure, reducing managerial compensation options from nine categories to five, a move aimed at streamlining decision-making and reducing administrative complexity.