Over its 50-year history, Microsoft has experienced significant downsizing. In July 2014, the company laid off some 18,000 employees; in January 2023, it cut 10,000 positions; and over the course of 2025, Microsoft laid off some 15,000 people.
His final move seems different. On Monday, Microsoft announced a Voluntary Separation Offer (VEO), a program widely described as a buyout, for up to 60,000 employees, or about a quarter of its workforce. In a note to employees that the company also posted on its blog, Amy Coleman, Microsoft’s executive vice president and chief human resources officer, wrote that the VEO “gives eligible employees who are considering a future outside the company a new choice to make that transition now with support.”
The note states that the offer is available to “eligible employees of participating teams in Canada, India, the United Kingdom and the United States at level 70 and below.” (Microsoft’s internal career levels start at 59 for entry-level employees; level 70 reaches far into the company’s senior management ranks.) Not all organizations participate; Coleman wrote that participation “varies based on each company’s priorities, customer commitments and workforce needs.” Eligible employees have until early December to decide, and those who accept will leave on Dec. 31, CNBC reported.
Microsoft insists that the program is not intended to shrink and that it expects only a small fraction of eligible employees to take it up. But the offering comes as the company is investing money in AI data centers, and some economists see it as part of a broader shift in big tech toward fewer workers and more equipment.
Who received the offer and who did not
Microsoft hasn’t released a list of participating teams, but the broad outlines are visible. A source close to the matter said Reuters that the offer covers employees in AI Experiences, Copilot, Finance, Human Resources, Xbox and Windows + Devices, while marketing, sales and security teams are excluded. Bloomberg reported a similar list, according to TechCrunchand a Microsoft spokesperson said some data center, sales and marketing employees are not eligible.
This split offers a general idea of where Microsoft wants to keep its employees: the teams that build and manage its data centers; sell its products to businesses; and ensure the safety of its customers. This is not a simple story of winners and losers when it comes to AI, however. Some of the teams that build Microsoft’s AI products, including Copilot, are among those being offered a way out.
Microsoft says it expects few takers
Contacted for comment, a Microsoft spokesperson confirmed Fortune that the VEO was being offered to 60,000 employees, but clarified that the intention was not to significantly reduce the size of the company’s workforce.
“If you look at the industry as a whole, you see that similar voluntary programs have a take-up rate of around 3 to 5 percent,” the spokesperson said. “In our case, that seems accurate to us; we expect a participation rate of less than 5% of the 60,000 employees eligible for the program… We don’t expect 60,000 people to walk out the door, and we would never want that. We want the right talent in the right places. We want engaged talent, and we want talent that really helps us innovate and scale as quickly as necessary.”
Microsoft CFO Amy Hood echoed that message in her quarterly memo to staff Wednesday, writing that the company expects “very few people” to accept the offer “due to the growth opportunities here at Microsoft,” according to Business Insider.
That would be a much lower share than the roughly 30% of eligible employees who accepted the company’s first-ever voluntary retirement program this spring. This program benefited approximately 8,700 long-term American employees and came with more favorable conditions.
“They hire while firing”
Joseph Phillips, professor of economics and dean emeritus of the Albers School of Business and Economics at Seattle University, said: Fortune he does not view the VEO as a major downsizing plan.
“I think any discussion about Microsoft’s workforce planning needs to start with the recent history of its global workforce,” Phillips said. “Before the pandemic, in 2019, they had around 144,000 employees worldwide. By 2024, this had increased to around 228,000 employees, very rapid growth over five years. Today, they have closer to 220,000, so not much different despite the announced layoffs of around 20,000 since 2024. in other words, they hire while they fire.” (Microsoft had 223,000 employees as of June 30.)
Phillips echoed the company’s view that the goal is to repurpose the workforce rather than shrink it. “Their business is changing and they need to change their workforce to align with those changes,” he said. “Certainly AI is part of it, and they are investing heavily in AI and becoming a more capital-intensive employer. So one would expect some of the workforce growth during the pandemic to be curtailed. I think that has more to do with reimagining its workforce and not downsizing for the sake of downsizing.”
The visa backdrop
The offer comes less than three weeks after the Trump administration suspended Microsoft and seven other companies from the Department of Labor’s Permanent Labor Certification Program (PERM). The PERM is the first step in obtaining most employer-sponsored green cards, including for many H-1B visa workers. Vice President JD Vance accused Microsoft of abusing the system, saying it laid off 6,000 U.S. workers last year while benefiting from 6,300 H-1B approvals. Microsoft President Brad Smith called the reasoning “irrelevant.”
Phillips says the timing of the VEO is likely a coincidence. “I suspect the VEO was in the works before the PERM suspension. If the company is offshoring its workforce, I think it would have more to do with the administration’s plans for the H-1B program, particularly the new fees. I doubt the administration’s assertion that Microsoft’s past layoffs are part of a plan to hire more foreign workers. As we know, the workforce level hasn’t changed much so far.”
The $100,000 fee on new H-1B petitions imposed by President Trump in September 2025 has since been blocked in court. In August, the administration proposed a rule to make fees over $100,000 permanent.
A transition from labor to capital
The numbers suggest a shift in focus from labor to capital spending. In the fiscal year ended June 30, the company spent $115.9 billion on property, plant and equipment, up from $64.6 billion the year before, according to its annual report. During the same period, its workforce decreased by around 5,000 people. And spending continues to rise: In the quarter ended September 30, Microsoft’s capital spending, including finance leases, rose about 30% to $45.2 billion, about three-quarters of which was spent on short-lived assets such as chips and networking hardware, CNBC reported. Hood said she expects spending to exceed $50 billion this quarter.
Microsoft said AI does not drive its buyback programs, according to KUOW. Not all outside observers interpret it that way.
Jay Zagorsky, associate clinical professor of markets, public policy and law at Boston University, said Fortune that the new offering, which follows the voluntary retirement program launched by Microsoft in the spring, could mean an overhaul of how the company’s workforce will be oriented in the future. He thinks it could also have implications for the entire tech industry.
“All businesses must decide the right balance between equipment and workers,” Zagorsky said. “In academic terms, we call this the split between capital and labor. With the advent of AI, it’s clear that all the biggest tech companies are moving toward more capital by building expensive AI data centers and (relying on) less labor. Microsoft’s announcement makes it clear that it wants fewer workers. I expect there to be more similar announcements in the near future from other big tech companies so that they are all moving towards fewer workers and more equipment.”
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