Microsoft offers one in four employees a way out in the week profits jumped 32%. Is it really about AI?

"This offer gives eligible employees who may be considering a future outside the company a new choice." With that line, Microsoft offered voluntary exits to about 60,000 people on October 26.

The post came from Amy Coleman, the company's chief people officer. According to Microsoft's official announcement, the offer covers eligible employees at "level 70 and below" in participating organizations in the US, Canada, India and the UK. In practice, that means people below vice-president rank. Each eligible employee gets an email with personal terms within hours.

About 60,000 people qualify. With roughly 223,000 full-time staff at the end of June, that is about one in four employees.

Two days later, on October 28, the same company reported its July–September results: revenue up 19%, net income up 32%. In those three months it spent $39.4 billion on data centers and other equipment, double the figure a year earlier.

Business is strong. Spending is surging. And a quarter of the workforce is being told there is a door if they want it. Rising profits and an exit offer landed in the same week.

Money for buildings like this, and money for people. The 60,000 offers are a story about how a company splits the two.

WHAT IS

MicrosoftMicrosoft

From the Windows and Office company to a landlord of cloud and AI computing

1. 2023.0110,000 jobs cutCEO Satya Nadella told staff the company would cut 10,000 jobs, under 5% of the workforce, by the end of March 2023
2. 2025Two rounds of cutsAbout 6,000 jobs in May and about 9,000 in July, according to reports
3. 2026Retirement offer, more cutsIn April, a retirement program for about 8,750 US staff; over 30% accepted. In July, 4,800 jobs cut, mostly at Xbox
4. NOW60,000 exit offersOn October 26, 2026, a time-limited offer to staff at level 70 and below in four countries

Microsoft is best known for Windows and Office. Today its growth engine is Azure, the cloud service companies use to rent computing power over the internet, and the AI that runs on it, including Copilot, its AI assistant for work.

The scale is hard to grasp. In the July–September quarter alone it booked $92.3 billion in revenue and $36.6 billion in net income, and Azure revenue grew 48% from a year earlier. Its annual report (Form 10-K) puts full-time headcount at about 223,000 as of June 30: 121,000 in the US and 102,000 elsewhere.

The offer covers four countries only. Staff at Microsoft Japan are not included.

At DATA TIMES we use AI every day to make our articles. So "will AI shrink jobs?" is our own question, too.

When the 60,000 figure went around the world, what caught our eye was less the headcount than where the money is going. Why would a company doing this well show people the door now, and where does the money go instead? We lined up Microsoft's announcement, its earnings, its annual reports, and data from other tech giants and from Japan.

First, what exactly is this? Microsoft calls it a "Voluntary Exit Offer." Unlike a layoff, where the company decides who goes, employees see the terms and choose for themselves.

Below vice-president, and each team decides

According to Coleman's announcement, each organization decides whether to take part, based on business priorities, customer commitments and staffing needs. Two people at the same level can get different answers depending on their team.

So which teams joined? Reuters reported finance, human resources, Xbox, Windows + Devices, and the teams building AI experiences and Copilot. Security, marketing and commercial sales were left out.

That surprised us. A company betting its future on AI is offering exits to its own AI product teams. This is not as simple as "keep the AI people, cut everyone else."

A package close to standard severance

The terms, first reported by Business Insider and relayed by the Israeli business paper Calcalist, look like this:

• Level 64 and below: one week of base pay for every six months of service
• Levels 65–67: two weeks of base pay for every six months of service (capped at 39 weeks)
• Level 68: a standard package of 12 months' pay
• Stock vesting continues for six or 12 months depending on tenure, with health coverage
• Employees decide by early December and leave at the end of the year

Someone at level 60 with ten years at the company, for example, would get 20 weeks of base pay, just under five months. Microsoft told TechCrunch the terms are similar to its standard severance. In other words, the sweetener is modest.

In the spring, over 30% said yes

Microsoft tried something similar earlier this year. In the US it offered retirement terms to about 8,750 employees whose age and years of service added up to 70 or more, and more than 30% accepted. Coleman wrote that the new program builds on that experience: "The Voluntary Exit Offer is new for us," she added. "We'll learn from it."

Line up the annual reports and something else stands out. Headcount at the end of June was about 221,000 in 2023, about 228,000 in 2024 and 2025, and about 223,000 in 2026. In three years, the workforce has barely grown, even as revenue and investment have ballooned.

Not all 60,000 will leave. If about 30% accept, as in the spring, that would be just under 20,000 people. Either way, it is another squeeze on a workforce that has stopped growing.

So where is the money going? The earnings make it plain.

In the July–September quarter Microsoft spent $39.4 billion on buildings and computers, up from $19.4 billion a year earlier. On the earnings call, CFO Amy Hood said the total was $45.2 billion including leases, and that about three quarters went to short-lived assets such as CPUs and GPUs, the chips that run AI. She expects more than $50 billion in October–December.

The annual figure is bigger still. In July, Hood put Microsoft's spending for calendar 2026 at about $175 billion. On the October call, she said delays in capacity from outside suppliers mean calendar-year spending should come in at about $170 billion.

The cost of the exit offer is already in the forecast

On the same call, Hood said the company's cost guidance "includes an estimate for the recently announced employee voluntary exit offer." She did not say how many people Microsoft expects to accept.

Meanwhile, she attributed the rise in operating expenses to investment in R&D compute capacity and talent. Trim the headcount, keep paying for the people who can build AI: you can see the company's spending priorities shifting right there.

AI revenue is already growing. Copilot's daily users rose more than fivefold in a year, and customers with more than 50,000 seats rose more than eightfold. The money earned goes into the next round of computers. The faster that loop spins, the smaller the share of spending that goes to people.

AI wrote 20–30% of Microsoft's code in 2025

There is no recent official figure for how much of Microsoft's internal work AI now handles. In April 2025, Nadella said AI was already writing 20–30% of the code in the company's repositories. That number is a year and a half old, and Microsoft has not updated it.

Microsoft has not said it is cutting people because AI does their work. What we can say is this: spending on data centers and equipment doubled in a year, while headcount has not grown in three.

Microsoft is not alone. Between 2025 and 2026, America's tech giants have all moved in the same direction.

Meta, the owner of Facebook, cut about 8,000 jobs, roughly 10% of its staff, in April 2026 and canceled 6,000 open roles. An internal memo said the cuts would "offset the other investments we're making." By the end of September, Meta had 66,775 employees, down 15% from a year earlier. Its capital spending this year is expected to reach $135–145 billion.

Google's parent Alphabet offered buyouts in its advertising sales unit in February 2026, after similar programs in search, ads and YouTube in 2025. Its July–September capital spending came to $51.4 billion, more than Microsoft's.

Amazon said it first

Amazon CEO Andy Jassy was the first to say it outright. In a June 2025 letter to employees, he wrote that generative AI would reduce Amazon's total corporate workforce. The company then cut about 14,000 corporate jobs that October and about 16,000 more in January 2026.

Yet on an earnings call, Jassy said the cuts were driven not by finances or AI but by an organization that had grown too many layers. Some companies blame AI and some don't. Either way, the companies spending the most on AI are the ones holding headcount down.

What is shrinking is hiring of the young

There is data from the workers' side, too. A Stanford team's August 2026 update, based on US payroll data, found that employment of 22- to 25-year-olds in the jobs most exposed to AI was about 19% below where it would have been otherwise. A year earlier the gap was 15%.

The detail matters. The report says the adjustment works mainly through less hiring of young workers, not more firing, and that it does not see widespread, economy-wide job displacement from AI. Before anyone is pushed out, the entrance is getting narrower.

What about Japan? Tokyo Shoko Research, a corporate credit research firm, counts every year how many listed Japanese companies offer early or voluntary retirement.

In the fiscal 2025 tally, 46 companies sought 20,781 people in total, about 2.5 times the previous year. Companies in the black, 32 of them, accounted for 81.3% of those places. The largest program was at Mitsubishi Electric, with about 4,700 people.

Things have calmed down in 2026. From January to September, 22 companies sought 5,345 people, less than half the number in the same period a year earlier. But profitable companies still made up more than 60%.

Some now cite AI as a reason

The same data includes OKI Electric Industry, which cited "changes in business processes as AI and digital transformation advance" as a reason for its early-retirement program. 668 people applied.

Early retirement in Japan has traditionally targeted older employees, often alongside a reshuffle of business lines. Reshaping the workforce while still profitable, before results turn: the core logic is the same as Microsoft's. The differences are scale and the size of the AI budget.

An October 2026 report from the Daiwa Institute of Research concludes there is still no clear answer on how much AI will affect employment. It flags the shrinking of on-the-job learning opportunities for young workers as a key issue, and says Japanese companies are no exception.

So, is it really about AI? Our answer: half yes, half no.

No, because the offer includes the AI product teams themselves, and because Microsoft has not said it is letting people go because AI now does their work. Amazon, for one, blames too many layers of management.

Yes, because of where the money flows. Capital spending doubled in a year; headcount is flat over three. Meta called its cuts an offset for other investments. Companies are holding down spending on people to spend more on AI. We read the 60,000 offers as a stronger push along that same path.

The part of the Stanford report that hit hardest was that the drop is in hiring young people. Big Tech exit offers make headlines; the people who were never hired do not.

For students about to look for work, we think this is the biggest change. The tasks AI now finishes quickly are often the very tasks new hires used to learn on. We expect companies to favor people who can use AI to take on bigger work from day one. Having built something real with AI as a student is likely to become a ticket through that narrower door.

There are lessons for Japanese companies in how Microsoft did this: each organization decides whether to take part, terms are spelled out to each person, and a smaller spring program was tested first. Japan reshapes its workforce too, but deciding team by team what to keep and what to change is a step beyond early-retirement programs drawn by age.

And the more a company invests in AI, the more it should explain cutting people and developing people on the same page. Microsoft's CFO discussed the cost of the exit offer and investment in AI talent on the same earnings call. Only when employees can see both can they really choose whether to stay or go.