Microsoft offered voluntary buyouts to about 60,000 employees on Monday, October 26, roughly a quarter of its workforce. The Voluntary Exit Offer covers participating teams in the US, Canada, the UK and India. It reaches up to the rank just below corporate vice president and pays the equivalent of Microsoft’s standard severance.
It isn’t a layoff. Nobody has to go, and Microsoft told GeekWire it expects far fewer takers than its retirement offer drew in the spring. Still, it’s Microsoft’s third workforce move this year. It also lands two days before the company reports quarterly earnings.
Who can take the Microsoft buyout
Amy Coleman, Microsoft’s chief people officer, announced the offer in a memo that the company published on its blog. The offer “will be available to eligible employees in participating teams in Canada, India, the United Kingdom and the United States at level 70 and below,” she wrote.
Level 70 is a rung on Microsoft’s internal career scale. It takes in general managers and some employees with vice president titles. It excludes corporate vice presidents, the company told GeekWire. The spring retirement program stopped at senior director, which is level 67.
There’s no age or years-of-service test this time, and performance isn’t a factor, Microsoft said. What decides eligibility is the team, because business leaders choose whether their group takes part.
“Some organizations are providing the Voluntary Exit Offer, and some are not,” Coleman wrote. Participation depends on “each business’s priorities, customer commitments and workforce needs,” she added.
Microsoft confirmed the figure of about 60,000 eligible employees to GeekWire and to TechCrunch, after Business Insider and Bloomberg reported it. Microsoft had about 223,000 full-time employees on June 30, its annual report shows. So the offer reaches about 27% of the company. Of that total, 121,000 worked in the US and 102,000 abroad.
Which teams are in, and which are out
This is where the early reports disagree, and Coleman’s memo doesn’t settle it, because it names no teams.
Microsoft told GeekWire that its sales organization isn’t participating, “nor are some engineering groups and corporate functions.” Some early write-ups dropped the word “some” and left all of engineering out. The company didn’t say that.
Two outlets have more detail from unnamed sources, and they broadly agree. Reuters cited a source familiar with the matter. That source said the offer covers AI experiences, Copilot, finance, human resources, Xbox and Windows + Devices. It leaves out marketing, commercial business and security.
Bloomberg, as relayed by TechCrunch, named Xbox, Windows, Copilot and finance as participants. It said some data center, sales and marketing staff can’t take the offer.
Put together, consumer AI, gaming and Windows are in. The parts of Microsoft that sell to and protect business customers are mostly out. Microsoft hasn’t published a list, so an employee’s own email is the only reliable answer. Eligible workers were due to get one with a link to their offer details on Monday.
What the package pays, and the December deadline
The offer is equivalent to Microsoft’s standard severance, the company told GeekWire. That means base pay set by tenure and level, plus continued stock vesting. It also includes health coverage for a fixed period and career transition services. Microsoft hasn’t published the formula.
It doesn’t include the extended health coverage that made the spring retirement program attractive, GeekWire reported. Employees have until the first week of December to decide. Those who accept will leave on December 31, a person familiar with the plan told CNBC.
The third cut in a year of record AI spending
Microsoft’s first-ever buyout came in April. Only US employees at senior director and below could take it. Their age plus years at the company had to add up to 70 or more, CNBC reported at the time, according to Reuters.
About 30% of the roughly 8,750 eligible workers took it, according to GeekWire. Microsoft took a $900 million charge for it in its April results, GeekWire reported.
Then came layoffs. On July 6 Microsoft said it would cut 4,800 jobs, about 2.1% of staff, Anadolu Agency reported from internal messages. Xbox took the biggest share, with 3,200 roles to go through fiscal 2027.
Coleman later told GeekWire that the retirement program’s take-up had made those layoffs smaller. Microsoft also cut more than 15,000 jobs in 2025, GeekWire reported.
The money is flowing the other way into data centers. Microsoft spent $115.9 billion on property and equipment in the fiscal year to June 30, its cash flow statement shows. The year before, it spent $64.6 billion. In the final quarter alone it was $35.8 billion.
That’s the pressure behind the buyout. Wall Street wants Microsoft to hold down operating expenses, GeekWire noted, even as capital spending nearly doubles. A voluntary offer lets it shrink chosen teams without the disruption of a layoff, but it can’t pick which people leave.
Microsoft says the offer isn’t a sign it needs fewer people. Layoffs remain an option depending on business conditions, it added.
The spending question is the same one hanging over the rest of Big Tech. Meta, for one, is selling up to $95 billion of stock to pay for its build-out. Our AI bubble explainer looks at what happens if those bets don’t pay.
How a buyout differs from a layoff for workers
The basic difference is who decides. In a layoff the employer picks who goes. In a buyout the employer picks which jobs are eligible, and each worker decides whether to leave.
Severance itself is a private deal. “There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay,” the US Department of Labor says. It calls severance “a matter of agreement between an employer and an employee.”
Unemployment benefits are trickier. They’re meant for people who lose work “through no fault of their own,” the Labor Department says. Each state sets its own eligibility rules.
Accepting an offer to leave can look like quitting. In Washington, for example, a worker who quits needs a specified good cause to qualify, a state Senate bill report explains.
Washington, Microsoft’s home state, changed its law this year. House Bill 2264, signed on March 23, covers workers who volunteer for an employer-initiated layoff or reduction in force. They can collect benefits as long as the employer ends their job under that plan.
The law names no employer. How it applies to Microsoft’s offer is for the state’s Employment Security Department to decide.
Taxes apply the same way as to a paycheck. Severance counts as income, and Social Security, Medicare and income tax withholding all apply, IRS Publication 525 says. Employers can withhold federal income tax on lump sums like this at a flat 22%, under IRS Publication 15. The rate is 37% on amounts above $1 million in a year.
Withholding is a prepayment, so the final tax owed depends on a worker’s full-year income. Rules in Canada, the UK and India are different.
Earnings on Wednesday may put a price on it
Microsoft reports results for the first quarter of its 2027 fiscal year on Wednesday, October 28, its investor relations page shows. GeekWire noted that the report could include a projected cost for the buyouts, as April’s did for the retirement program. Eligible employees then have until early December to make their choice.
