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The pros and cons of offering voluntary buyouts to employees
David Ryder/Reuters
- Microsoft recently offered voluntary exit packages to some employees. It's the company's second buyout offer this year.
- Some Google workers have said they want buyouts offered before layoffs, and to more employees.
- Buyouts might soften job cuts, though broad offers could also send top talent out the door.
Voluntary buyouts are gaining momentum in Big Tech.
On Monday, Microsoft offered the exit packages to some of its employees for the second time this year, its latest attempt to slim its workforce without layoffs. In April, the company launched its first broad voluntary retirement program, offering packages to thousands of longtime US employees.
Separately, workers at Google pressed the search giant this past summer to make voluntary buyouts a standard first step whenever it plans job cuts — and to extend them to all members of affected teams, regardless of tenure.
Outside tech, Skydance, the company formed by the merger of Paramount and Warner Bros. Discovery, told employees Monday that it would require five days a week in the office. Employees unwilling to comply might be eligible for a buyout.
The developments are raising broader questions in tech, where many once-scrappy startups are now sprawling corporations — and where repeated rounds of layoffs have eliminated scores of jobs in recent years.
Now that many tech companies have workforces that include employees with decades of service, are buyouts — long part of the workforce-reduction playbook at legacy companies from Boeing to General Motors — a fairer, less painful way to reduce head count than layoffs? And should they remain reserved for veteran employees, as they traditionally have been, or be offered more widely?
"Buyouts are becoming increasingly compelling for older Silicon Valley companies," said Laszlo Bock, a former Google head of human resources who now advises CEOs. "They have more eligible people, and it's a softer message for morale."
A 'more humane' approach
Nearly 100 Google employees rallied in July outside the company's Mountain View headquarters, arguing that the company's past use of selective exit offers should be made a broader, more consistent policy. As part of the event, the union presented a petition signed by more than 4,500 Googlers calling for improved layoff protections.
Voluntary buyouts "provide agency to workers," Emma Jackson, a Google employee of more than 20 years and a leader of the Alphabet Workers Union, previously told Business Insider. Alphabet is Google's parent company.
Jackson said workers nearing retirement might have accepted buyouts in earlier rounds of layoffs at Google, reducing the number of cuts needed. She called the approach "more humane."
Google didn't respond to a request for comment from Business Insider. Alphabet said in July that its workforce had grown by nearly 12,000 employees over the prior year, reaching about 199,000 at the end of June.
With Microsoft's latest voluntary buyouts, the company said around 60,000 employees — or more than a quarter of its workforce — will be eligible and that the terms will be similar to its standard severance. They 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 spokesperson said.
Microsoft made its voluntary retirement program available to employees whose age and years of service added up to at least 70, meaning some could qualify well before a conventional retirement age.
At 47, retirement wasn't on Marisela Cerda's radar. Yet Cerda, a principal customer experience manager at Microsoft who joined the company after college in 2001, was among those who received an exit offer this past spring.
Although she ultimately decided to stay, Cerda previously told Business Insider that she stuck around as long as she has because of the opportunity to keep learning about emerging technologies and the relationships she has built with colleagues. The offer prompted Cerda to think more urgently about the next phase of her career.
"You move toward what you want more of, versus moving away from things you don't want," she previously said.
Why the calculus may be changing
As Silicon Valley companies grow older alongside their workforces, buyouts may grow more attractive, said Josh Bersin, an HR analyst and consultant. Forcing veteran employees to leave through layoffs "creates a lot of bad blood," he said.
Peter Rahbar, a New York employment attorney and cohost of the "Across the Bar" podcast, said buyouts might not reduce staff as quickly as layoffs, but they don't carry the same "huge" morale costs for those who remain — or for potential future hires.
"How you treat people on the way out is certainly something people look at on the way in," he said.
There are downsides for employers, however. Offering buyouts can make labor reductions less predictable, said Jay Zagorsky, a professor at Boston University's Questrom School of Business. If too few employees accept, a company may still need to make cuts to reach its target.
"With a layoff, there's certainty," he said.
Extending buyout offers to everyone, including those who've logged only a few work anniversaries, also carries drawbacks.
"People whom you would prefer to stay might leave," and they could go to a competitor, said Bock, the former Google executive.
The risk is especially concerning for companies with what he calls "spiky talent," where a small number of employees create disproportionate value.
For workers who receive a buyout offer, Rahbar, the employment attorney, said they should understand how accepting it would affect their retirement benefits, stock awards, deferred compensation, and healthcare coverage. Depending on a company's plans, employees who retire may continue vesting in certain benefits or retain those they have already earned, he said.
Buyout packages also tend to be more generous than the severance offers, Rahbar added, and there's an emotional difference between choosing to leave and being told to go.
"People are feeling good about leaving on their own terms," he said. "With a layoff, they're clearly not."
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An earlier version of this story appeared on July 27, 2026.
