• 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.

Have a tip? Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a non-work device; here's our guide to sharing information securely.

• Charles Lamanna, head of Copilot, Agents, and Platform, just took over Office and Teams.
• Teams within his new combined unit have adopted flatter structures amid the rise of AI agents.
• He's also enforced a stricter RTO for senior staff, and offered employees relocation to major hubs.

Microsoft's head of the Copilot platform, AI agents, and now Office is making good on his promise to reshape how his teams work.

"The most important thing my team will do this year won't be any single product or feature we ship: instead, it will be changing how we work," Charles Lamanna, the new boss of this key Microsoft unit, wrote in August.

Lamanna has started requiring senior staff to work in offices four days a week, and he's offering relocation to major hubs, according to people familiar with the changes. Teams within his organization have also reorganized to a flatter structure removing middle managers in line with Lamanna's views about how agentic AI is changing engineering.

"We're rethinking where managerial layers are critical and where flatter structures can enable faster decision-making, clearer ownership and greater autonomy," a Microsoft spokesperson said.

The moves offer an early look at how Microsoft is reworking its software empire for the AI age. Lamanna, who already oversees the company's Copilot and AI agent platforms, now controls the Office productivity software and Teams workplace chat service that are used by millions of workers.

Lamanna took over those groups earlier in October when the previous boss, Ryan Roslansky, announced plans to leave at the end of the year. Roslansky was seen as a successor to Microsoft veteran Rajesh Jha, who retired in July. Roslansky and Lamanna were two of the three executives who made up the new Copilot leadership team.

The changes come as CEO Satya Nadella reshapes the company around AI. Microsoft has been consolidating responsibility for its AI products, and a wave of senior executive departures has made way for a new generation of leaders.

"Span of control"

Lamanna's expanding responsibilities make him a key player in this leadership transition, giving him oversight of Microsoft's flagship workplace software and the AI tools that could change how customers use its products.

Recently, the Teams unit now under Lamanna reorganized by increasing the "span of control" for managers in engineering, according to two of the people familiar with the changes.

This refers to the number of employees who report to each manager, and it's become common for tech companies to flatten engineering organizations like this in the AI era, as coding tools and agents write more software.

The reorganization included converting managers to individual contributors, the people said. The idea is that agentic coding capabilities mean Microsoft needs fewer managers, according to one of the people. The team will now have a ratio of one manager per 12 individual contributors.

"Agentic coding capabilities have changed every level of the engineering function," Microsoft's spokesperson said. "Software engineers are no longer hand-assembling every line of code. Instead, they are now designing and directing the 'agentic coding machine' that helps build the product."

As AI makes it easier to build software, skills like making sound technical decisions, designing systems, ensuring quality and security, and understanding customer needs become more valuable.

"At the same time, some tasks that traditionally required managerial coordination, such as managing handoffs and orchestrating work across teams, become less central," the spokesperson said.

Other teams have implemented similar restructuring, the spokesperson confirmed.

RTO and relocation

Lamanna has also started reshaping where employees work. Last week, Lamanna's Copilot, Agents, and Platform (CAP) organization offered select US employees the option to relocate to offices at Microsoft's Redmond, Washington headquarters, San Francisco, or New York, according to three people familiar with the plans.

The people who spoke with Business Insider for this story asked not to be identified discussing internal matters.

Lamanna has also asked employees at the "partner" level and above — some of Microsoft's most senior staff — to start working in physical offices at least four days a week. The companywide standard is three days a week.

Have a tip? Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a nonwork device; here's our guide to sharing information securely.

• Microsoft lowered its 2026 capex forecast to $170 billion, down from $175 billion.
• CFO Amy Hood cited delays in third-party capacity as Wall Street scrutinizes returns on AI spending.
• Azure revenue jumped 48%, beating expectations, while Microsoft's headcount fell 2%.

Microsoft reduced its forecast for capital expenditure, a rare move in an industry that mostly continues to splurge more on huge AI investments.

The software giant said capex for the 2026 calendar year will be $170 billion from a previous forecast of $175 billion.

Chief Financial Officer Amy Hood gave the forecast on the company's fiscal first-quarter earnings call on Wednesday.

She said Microsoft was expecting new capacity to arrive from third-parties, but some of these "GPU-as-a-Service contracts" have been delayed until the second half of the fiscal year.

This likely refers to other providers of AI cloud services that use Nvidia GPUs to run their offerings. Microsoft has partnered with some outside providers to meet rampant AI demand.

Hood's comments could refer to a recent spate of AI data center project delays, which have mostly been caused by a lack of electricity, along with local opposition.

The CFO said Microsoft expects capex to accelerate in the second half of its fiscal year, as the delayed capacity kicks in.

Wall Street has become increasingly concerned the huge investments cloud companies are making to expand AI infrastructure. Microsoft last quarter kept its forecast unchanged, notable as many cloud giants have been steadily increasing their AI spending forecasts.

Overall, Microsoft reported $92.3 billion in revenue, up 19%, for the fiscal first-quarter ending Sept. 30. Azure cloud revenue was up 48% to more than $33 billion, surpassing Wall Street expectations.

Microsoft share were up about about 3% in after-hours trading following the earnings call.

Earlier this week, Microsoft offered a buyout to more than a quarter of its workforce. A Microsoft spokesperson told Business Insider on Wednesday that the company expects 5% of eligible employees at most to accept the buyout.

"We expect very few people to select this offer because of the growth opportunities here at Microsoft," Hood wrote in an internal memo viewed by Business Insider. Microsoft's headcount slipped 2% during the fiscal first quarter, the company reported.

Have a tip? Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a non-work device; here's our guide to sharing information securely.

• 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

Have a tip? Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a non-work device; here's our guide to sharing information securely.

• 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.

Have a tip? Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a non-work device; here's our guide to sharing information securely.

• Microsoft is offering buyouts to around 60,000 employees.
• The offers will go out later today, and resemble Microsoft's standard severance offer.
• The buyout offer could help Microsoft cut costs and reshape its workforce for the AI era.

Microsoft is offering buyouts, according to a memo Chief People Officer Amy Coleman sent to employees Monday.

"The Voluntary Exit Offer reflects an important part of how we're evolving our approach to change: creating greater flexibility and, where possible, more ways for employees to shape their next chapter," Coleman wrote.

Microsoft's voluntary exit offer is the company's latest attempt to slim its workforce without another round of involuntary cuts. After spending heavily on AI infrastructure and reducing headcount this year, Microsoft is offering remaining employees a chance to leave, testing whether voluntary departures can cut costs.

Eligible employees in the U.S., Canada, India, and the U.K. at level 70, which includes senior leaders at the company, and below, will receive an email later Monday with the terms of the offer. Only some teams are participating, excluding sales organizations, some engineering, and some corporate functions.

Around 60,000 employees — or more than a quarter of the company's workforce — about will be eligible, a spokesperson told Business Insider, and the terms will be similar to Microsoft's standard severance.

The US severance package offered when Microsoft laid off employees earlier this year included a minimum of 60 days of base pay, during which employees will remain on the payroll, and, for most employees, up to a maximum of 39 weeks of base pay, based on seniority and tenure.

Employees at internal levels 64 and below received one week of base pay per six months of service, for example, and employees at levels 65 to 67 will receive two weeks of base pay per six months of service, according to offers reviewed by Business Insider.

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, Microsoft's spokesperson said.

The buyout offer follows Microsoft's Voluntary Retirement Program, which offered a retirement buyout to about 9,000 eligible employees based on age and tenure.

About one-third of eligible employees took the buyout, in line with expectations, a person familiar with the turnout told Business Insider in June. That buyout allowed Microsoft to lay off a lower percentage of its workforce compared to last year, the person said at the time.

Read the memo:

Introducing a Voluntary Exit Offer

Today, we're introducing a new Voluntary Exit Offer (VEO) to eligible employees within participating organizations. This offer gives eligible employees who may be considering a future outside the company a new choice to make that transition now with support. It also gives participating orgs another way to adapt their workforce to changing needs.

The Voluntary Exit Offer reflects an important part of how we're evolving our approach to change: creating greater flexibility and, where possible, more ways for employees to shape their next chapter. This builds on what we learned earlier this year through the Voluntary Retirement Program.

What employees should know

This offer will be available to eligible employees in participating teams in Canada, India, United Kingdom and United States at level 70 and below. This is a time-limited, voluntary program that gives those who are eligible the opportunity to leave Microsoft with financial support and career planning resources. Some organizations are providing the Voluntary Exit Offer, and some are not. Participation varies based on each business's priorities, customer commitments, and workforce needs.

Eligible employees will receive an email with a link to their Voluntary Exit Offer details within the next few hours.

Looking ahead

The Voluntary Exit Offer is new for us. We'll learn from it. At the same time, we'll keep helping people focus on the work that matters most, build new skills, and, where it makes sense, find new opportunities across Microsoft. There is no one-size-fits-all approach for every team or every employee. These are a few of the ways we're trying to meet different business needs while continuing to create opportunities for our own people to grow and contribute.

My promise is to continue to provide clarity, listen and learn, and keep improving.

Thank you for everything you continue to do for our customers, Microsoft, and for one another.

Amy

Have a tip? Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a nonwork device; here's our guide to sharing information securely.