• 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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• Amazon shifts AI focus to business impact, not just raw usage, in new developer guidelines.
• The company warns that AI metrics can create bad incentives, including “tokenmaxxing.”
• Managers are told to examine teams at both the highest and lowest levels of AI adoption.

Amazon just issued new guidelines for software engineers in the AI era: Prioritize business outcomes over raw usage.

Terk Terkowitz, Amazon's vice president and distinguished engineer, said in a memo published Tuesday that AI is changing software development more quickly and fundamentally than earlier shifts such as cloud computing. But engineers should be judged by their impact on customers and the business, he wrote, not simply how much they use AI.

"We all need to embrace this change and take the time to learn, or we risk being left behind," Terkowitz said.

AI coding tools and agents are upending the software industry and changing what it means to be a coder. Amazon calls this the "era of the Renaissance Developer," where human judgement and machine intelligence combine to create new products and services faster and more efficiently.

"This is a time of change for our industry, and a time of change for what it means to be a software engineer," Terkowitz wrote in the memo.

The updated guidelines reflect Amazon's growing effort to make AI adoption part of how it assesses engineers and engineering managers. The company has tracked measures including AI usage, token consumption, and lines of code internally, and used leaderboards to rank teams by some of those metrics.

But the memo warns that using such measures as targets can produce bad outcomes, including "tokenmaxxing" rather than better software or customer experiences.

"Using these metrics could, if used as a target instead of a measure, drive negative outcomes," Terkowitz wrote in the memo.

Amazon has been experimenting with ways to measure and encourage AI use across its engineering organization.

Earlier this year, the company was tracking engineers's use of internal AI tools and some teams used leaderboards tied to measures such as token consumption. The programs created friction among some employees, who worried that pressure to use AI could reward wasteful activity rather than productive work.

The new guidance offers Amazon's clearest public acknowledgment of that risk. Rather than lay out a detailed AI playbook that could quickly become obsolete, Amazon said its revised developer guidelines focus on long-term impact on customers and the business.

Still, the company said AI should be "at the center of software engineering practice" and urged engineers to incorporate the technology into their daily work.

Leaders are expected to use AI tools on production work themselves, understand where they help and where they fall short, and explain that judgment to their teams, according to the memo.

Terkowitz said Amazon has found that metrics such as token use, AI-tool adoption, and code reviews can correlate with the outcomes it values. But he said the measures must be used carefully. More token use can raise costs, while a focus on lines of code can create unnecessary complexity.

He also recommended that managers pay particular attention to teams at both ends of the AI adoption spectrum: those in the bottom 10%, to understand why they are not using AI effectively, and those in the top 10%, to determine whether heavier use is translating into faster delivery.

Terkowitz said Amazon's most AI-forward "frontier teams" have shown stronger productivity and delivery. He also said teams and individuals that are not adopting AI or increasing output metrics are falling behind.

But his memo left room for engineers whose work may not yet benefit from current AI tools. In those cases, he said, employees should document why and work toward a solution by sharing their findings with peers and managers.

"An engineer who can explain where AI does not yet help their work is demonstrating the judgement we are asking for," the memo said.

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