Microsoft offers exit option to thousands of employees, revamps pay and rewards system

Instead of abruptly laying off, Microsoft is offering voluntary retirement to 7% of its workforce in the US. The decision comes amid the growing investments in artificial intelligence (AI), which is reshaping roles and workforce needs. This is the first time Microsoft has taken such a step, according to a Bloomberg report.

While the exact numbers have not been made public, it is anticipated that nearly 9000 employees will be eligible for the program, considering the company recorded 125,000 employees in the US as of June 2025. 

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Microsoft voluntary exit: Who is eligible?

Reportedly, it applies to employees in the US at the senior director level and below. An internal memo by executive vice president and Chief People Officer Amy Coleman highlighted that eligibility is based on a “Rule of 70,” where an employee’s age and years of service at Microsoft must add up to 70 or more.

“Our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support,” the memo reads.

In addition to a voluntary exit plan, Microsoft has also revamped employee rewards with performance-related bonuses and stock. The company is reducing pay levels from nine tiers to five. It is also removing the performance “curve” system, which previously compared employees against each other for ratings. 

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In addition, Microsoft is separating stock rewards from cash bonuses; this way, managers will no longer be required to directly link stock awards to cash bonuses, which gives the company a more flexible and separate system for annual compensation.

Microsoft AI investment expands

In recent months, Microsoft has been spending heavily to build AI infrastructure and expand data centres to support its cloud customers in running generative AI models. Previously, the company announced to spend $18 billion on AI cloud and infrastructure in Australia. On the other hand, it is also committed to a $10 billion investment over four years in Japan to boost its AI infrastructure. 

Other big tech giants, including Alphabet and Amazon, are pulling similar moves to scale up their cloud and AI capabilities, as competition intensifies to power the next generation of generative AI models.