Microsoft Initiates its First Ever Employee Buyout in History

Microsoft has announced it will offer employee buyouts to some US employees. This is the first time in history that Microsoft is doing this. Most people attribute this to the major changes that are reshaping the tech industry forever, or in simple words, AI.

According to sources, about 7% of the US workforce is eligible for this buyout. The one-time retirement will only be given to people who fall within a certain criteria and should be at the senior director level. For people below, the criteria are their years of service at Microsoft, plus their age should be more than 70 or higher.

Microsoft has been significantly increasing its investment in data centres to meet the growing demand for computing power required by generative AI. Other major players, such as Alphabet and Amazon, are following a similar path. At the same time, software companies are facing market pressure as AI-driven coding tools from firms such as Anthropic begin to challenge traditional business models.

Over the past year, Microsoft has already reduced expenses through several rounds of layoffs. By June 2025, the company’s global workforce stood at around 228,000 employees, with approximately 125,000 based in the United States.

The company is also making changes to its compensation structure. Going forward, stock awards will no longer be directly linked to cash bonuses. This shift is intended to give managers greater discretion in recognising and rewarding strong performance.

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Additionally, Microsoft is streamlining its performance review system. Managers will now select from five compensation categories, replacing the earlier system that offered nine options.

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