• Microsoft offered a buyout to 60,000 employees this week.
• The offer spooked the tech industry and stoked chatter and concern inside the company.
• The key question: How many employees Microsoft is prepared to lose?

Microsoft's huge employee buyout stunned the industry this week, raising urgent questions about why the software giant might want so many people to leave.

Inside the company, concerned staff debated the meaning of the move. Why might Microsoft want to shed 60,000 workers? Will roles be replaced by AI? Are more layoffs ahead?

Business Insider spent recent days speaking with Microsoft insiders to find out what's really happening. The people asked not to be identified discussing sensitive matters.

The main takeaway so far is that Microsoft seems to have unnecessarily spooked employees with the sheer size of its buyout offer, leaving leaders scrambling to calm the troops.

Chief Financial Officer Amy Hood in an internal memo explained the offer was intended to "offer employees agency if they choose to leave the company on their own terms" and said the company expected "very few people" to accept.

Microsoft doubled down later and told Business Insider it anticipates 3,000 or fewer employees will take the buyout. That's only about 5%, or less, of those eligible.

Layoff concerns

Earlier this year, the company offered a retirement buyout to employees based on age and tenure. About one-third accepted.

Soon after, Microsoft did another round of layoffs. Some employees who didn't accept the retirement offer ended up losing their jobs.

That's led to speculation that more layoffs may come in the wake of this week's bigger buyout offer.

"Future workforce needs will continue to be based on business needs and priorities," Microsoft said in a statement.

Misconceptions and differences

Business Insider spoke to Microsoft executives who said there are misconceptions about the current buyout offer.

These executives could only speak about their own teams, and they were hesitant to definitively say layoffs aren't coming. However, they pointed out a few differences between the current buyouts and the retirement offer.

"Microsoft doesn't want to shrink by 60,000 people," one executive said, while asking not to be identified. "We are not replacing everyone with AI."

This person thinks Microsoft made latest buyout offer because some employees complained that they weren't eligible for the retirement buyout earlier this year.

And in the case of the retirement buyout, when employees left, Microsoft didn't fill those roles — the headcount went away.

This week's buyout works differently. In some cases, when staff leave this time their roles will be backfilled with new hires.

Why the latest buyout looks so big

One reason the latest buyout looks so huge: Some leaders decided it would be simpler to offer it to their entire organization, rather than try to pick which specific teams or individuals should be included.

"It's easier to opt-in giant organizations," one Microsoft executive told Business Insider.

Charles Lamanna, the executive in charge of the Copilot Platform, AI agents, Office and Word, decided to offer it to everyone in his organization, one of the people said. That includes many people in critical positions. The organization is prepared to backfill roles if any of those critical employees accept the buyout, this person said.

The Cloud + AI group took a different approach

Microsoft's key Cloud + AI division took a slightly different approach, according to another executive from the company.

Two teams — Azure Hardware Systems and Infrastructure and Cloud Operations + Innovation teams — decided not to offer the latest buyout to staff.

Most other groups within the Cloud + AI division did offer the buyout to employees. And this division can backfill some roles, this executive told Business Insider.

Cutting costs and avoiding layoffs

Backfilling roles could still help Microsoft cut labor costs. One executive at the company said if a senior person were to leave, they would likely backfill the role with someone more junior who would potentially be paid less. A Microsoft spokesperson said that's not an official company position.

If all this seems overly complex, compared to layoffs, there may be a reason: Microsoft has been under fire for cutting American staff while employing foreign workers.

The Trump administration recently suspended Microsoft from a federal program that sponsors foreign workers for permanent residency, accusing the company of laying off American employees while hiring lower-paid foreign workers. Microsoft has denied those claims.

"Never say never, but there's a lot of desire not to do big layoffs, especially as an American company," one of the Microsoft executives told Business Insider.

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• Microsoft is offering buyouts to about a quarter of its workforce.
• In an internal memo, Microsoft's finance boss said the company expects "very few people" to accept.
• Employees had been questioning the rationale behind the offer, the memo said.

Microsoft expects 3,000 or fewer employees to accept the buyout it offered this week to more than a quarter of its workforce, a spokesperson told Business Insider.

The point was reiterated on Wednesday by Chief Financial Officer Amy Hood, who wrote in an internal memo that employees have been questioning the rationale behind the buyout.

"I know there have been some questions on the rationale behind the voluntary exit offer that we announced this week," Hood wrote. "Our intent is to offer employees agency if they choose to leave the company on their own terms. We expect very few people to select this offer because of the growth opportunities here at Microsoft."

The memo statement was part of a quarterly earnings email Hood typically sends internally to employees every quarter when Microsoft discloses its financials.

These memos mostly repeat what the company reports publicly, but this time Hood went out of her way to address the buyout offer, which caused quite a stir across the tech industry this week.

Earlier this year, Microsoft offered a different retirement buyout. In that situation, about one-third of eligible employees took the offer, and that helped Microsoft cut fewer employees in subsequent layoffs.

This week's buyout is getting a lot less uptake, according to the company.

Read the CFO's full memo

Team,

This afternoon, we announced our first-quarter financial results. We exceeded Wall Street expectations, growing revenue 19% and operating income 21%.

With the start of FY27, we also made an important change to how we report our business. We announced that we changed our reporting structure for the first time in 12 years, moving from three segments to two: Agents and Infra, and Devices and Consumer. This change better reflects how we are running the business today — from how we build products and allocate resources to how we create value for customers across the connected layers of our platform. To give you a sense of the two segments, looking back to last fiscal year, Agents and Infra would have represented about 81% of our revenue while Devices and Consumer would have been 19%.

A few highlights from the quarter across our two new segments:

• Agents and Infra grew revenue 23% this quarter
• Microsoft Cloud revenue was $63.9 billion and accelerated to 30%.
  Azure revenue increased 48% reflecting accelerating Foundry demand.
• Microsoft 365 commercial cloud revenue increased 18% in constant currency driven by growth in our premium seat offerings like Copilot and E7 as well as usage-based services across M365 Copilot and GitHub Copilot.
• Microsoft 365 commercial seats increased 5% and the number of customers with more than 50,000 M365 Copilot seats increased 8x year-over-year.
• Microsoft 365 consumer cloud revenue increased 17% with subscriber growth of 7%.
• Industry solutions cloud revenue increased 10% with growth in Dynamics 365 and LinkedIn Talent Solutions.
• Devices and Consumer declined 3% this quarter
• Search and advertising revenue ex-TAC increased 12%, with growth across LinkedIn, Bing, and Edge.
• Windows OEM and devices revenue decreased 22%, reflecting the prior-year benefit from Windows 10 end of support, inventory drawdowns by OEM partners, and weaker PC market demand.
  XBOX content and services revenue decreased 2%. Last week, we launched Call of Duty: Modern Warfare 4, as we continue to bring great games to more players across more devices.

Thank you for everything you did to deliver a strong start to the year. In particular, I want to thank our engineering and capacity delivery teams who are working to help us deliver more capacity faster and with high reliability. These teams are also using the capacity we have more efficiently to create room for us to better meet customer demand for the Azure platform, which continues to exceed our supply.

I know there have been some questions on the rationale behind the voluntary exit offer that we announced this week. Our intent is to offer employees agency if they choose to leave the company on their own terms. We expect very few people to select this offer because of the growth opportunities here at Microsoft. We'll continue to provide a broad set of options for employees to learn, gain new skills, and advance their careers here.

We have tremendous opportunity ahead of us. To meet the moment, we are focused on delivering great products and solutions that help our customers to achieve their many goals — security, innovation, growth — to name a few. Thank you for keeping positive, value-creating outcomes for our customers at the top of the list.

To hear more details about the quarter and our outlook for Q2, you can join live today at 2:30PM Pacific Time, listen on-demand, or read the transcript on the Investor Relations website. Finally, mark your calendars for Microsoft Ignite, on November 17-20, where we'll show how our innovation across AI, cloud, data, security, and Copilot is coming together to help customers transform their businesses.

With appreciation and gratitude,

Amy

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• Microsoft is offering buyouts to around 60,000 employees.
• Chris Williams, former Microsoft VP of HR, said waiting for a better offer may or may not backfire.
• He shared what employees who are offered a buyout should consider and what they may not realize.

Microsoft is offering buyout packages to some 60,000 employees, or more than 25% of the workforce. That's a huge number in any terms, and it sent a signal and shock wave through the industry this week.

I'm the former VP of HR for Microsoft, and although I've been away from the company for some time and have no insider information, having been on the inside at Microsoft and in the industry for 50 years, here is what Microsoft employees should be considering — and what they may not realize about taking a buyout offer.

Your buyout offer may or may not be the best offer you get

During a buyout, position, tenure, level, and other factors are taken into account for each bespoke offer. The offer is likely to include compensation, benefit continuation, and possibly some acceleration or continuation of equity vesting.

That said, Microsoft might not offer more generous buyouts than severance packages, but companies usually offer better terms to people who take a voluntary separation than people who get laid off. That is not only to induce employees to go voluntarily, but also because the costs to the company are less if these workers voluntarily leave. There is less legal risk, time, and expense. It's also simply easier for the company to manage.

If you're offered a buyout, I usually find it could be the best offer you'll get. If it's not, you could be settling for the same offer as someone in a layoff and miss out on collecting unemployment.

A buyout can force some very hard career choices

If you get a buyout offer, looking at your budget should be your next step. Does the offer provide you with enough to retire? Enough to support an extended job search? The buyout can be a good forcing function for some very hard career choices.

Spend time looking at your cash flows, and pay particular attention to benefits. For many, healthcare costs are a substantial part of their budget. Weighing the buyout offer against continued coverage is often a tipping point in the decision.

Also consider any equity vesting dates you may have. Compare when you might vest with and without the offer, as those dates can mean a significant change in your investments. Whether you should take the buyout is highly dependent on both the offer and your situation. If you had retirement anywhere in sight, this offer might be just the trigger you need to move on. Perhaps the best offer you'll ever see.

However, if you need to continue working, there's a great deal more to consider.

Taking a buyout can give you a head start in a tough job market

The tech industry job market has been rough for the last year or so, and shows all the signs of getting worse. If the buyout doesn't afford you the ability to retire, you should plan on an extended period of job searching, maybe six months or more. It's tough out there. Be prepared.

One thing to consider if you need to continue working is that taking the buyout might give you a short head start in the job market. Assuming Microsoft and others follow this up with more layoffs like they did the last time, the technical job market will be flooded with quality people. Of course, you can search for a job while you have one, but taking the buyout gives you time for a full-time job search.

In any case, if a job search is in your future, don't delay. This market shows no sign of getting better.

Finally, if you're offered a buyout, don't ignore it. It's a sign. I'd read it as a clear signal from the company about your value, at least from their perspective. You can bet on the odds, but if follow-up layoffs happen, I'd bet that those who declined the buyout are somewhere on that list.

Buyout or not, some things to do

This buyout is the latest signal of a broad realignment of the job market, at least in the tech sector. Even if you aren't offered it or don't think you're at risk of later layoffs, you'd be wise to keep all your options open.

Get your résumé up to date. Spend time honing it, emphasizing the clearest set of skills you can. When a market is contracting, the safest bet is having a particular skill someone is looking for. When times are tight, the generalist is often the first person let go.

Work with and expand your network. Have coffee or a Zoom chat with everyone you know. Peers in other companies, even other industries, are invaluable when things get tough. Especially when the world is changing, and predicting the next hot spot is so hard, having as many warm connections across industries is a huge asset.

Don't go asking for jobs as much as keep those connections alive. You never know when someone's manager will say, "We need someone like that." And your friend can say, "I know just the person."

Whether you are offered a buyout, or whether you decide to take it or not, having a network of people to connect with is your single biggest career asset.

What to do if you get a buyout offer

Budget first, and outreach next.

Carefully decide your near- and long-term financial future, and make the decision from hard facts. Then connect with people you know across industries, far and wide. Those connections will be excellent sounding boards and could well provide the path to your next role, or the friends you need in retirement.

When contacted about this story, a Microsoft spokesperson pointed Business Insider to its statement on the official Microsoft Blog, which read in part, "Today, we're introducing a new Voluntary Exit Offer (VEO) to eligible employees within participating organizations." They added that "the VEO is similar to a standard severance offer, which varies by market. The offer includes payment based on completed service and base pay, as well as career transition services, which includes career coaching and job search assistance."

• Microsoft is offering buyouts to about 60,000 employees.
• The offers are individualized to each employee based on their level, location, and tenure.
• Business Insider reviewed offers to show what employees get when they leave the company.

As Microsoft sends out its buyout offers to more than a quarter of its workforce, specific offers reviewed by Business Insider reveal exactly what employees get if they choose to leave the company.

The offers are individualized for each employee based on their level, location, and tenure. Those reviewed by Business Insider confirm that the US buyouts align with the company's US standard severance offers. A Microsoft spokesperson said about 60,000 employees would be eligible for the buyout.

Microsoft uses a levels system to represent seniority, from entry levels starting at 59 to senior levels at 70, or vice president. The company offered buyouts to employees on select teams in the US, Canada, India, and the UK at level 70.

Offers reviewed by Business Insider show employees at internal levels 64 and below were offered one week of base pay per six months of service, and employees at levels 65 to 67 were offered two weeks of base pay per six months of service.

Buyout offers also include continued regular stock vesting and health insurance. The standard stock-vesting severance offer is six or 12 months for levels 67 and below, based on years of service.

Eligible employees will have until early December to decide whether to take the offer and exit at the end of the year, and there are no plans for another buyout at this time, a Microsoft spokesperson said.

Standard severance is capped at 39 weeks of base pay for levels 67 and below, while the standard severance offer for level 68 includes 12 months of salary.

Earlier this year, Microsoft rolled out a voluntary retirement program for employees. About 7% of Microsoft's US workforce, or about 8,750 people, were eligible at the time. As Business Insider previously reported, Microsoft's voluntary retirement program offer also aligned with the company's standard severance offer, including continued regular stock vesting for six or 12 months, based on years of service.

Earlier this year, another tech giant, Google, offered buyouts to staff in its business unit, Business Insider previously reported.

As more tech companies offer buyouts, some human resources professionals previously told Business Insider that this approach could soften job cuts, and also that when they're made available to workers of all tenures, companies risk losing talent.

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