Microsoft’s AI future has fewer jobs

To anyone listening closely to what Microsoft CEO Satya Nadella has been saying over the past couple of years, this week felt like the clearest sign yet that AI is about to fundamentally change the size of Microsoft’s workforce. Microsoft is now offering voluntary buyouts to around 60,000 employees across the US, UK, Canada, and India.

It’s the first time the company has presented such an offer to so many employees, expanding greatly upon the retirement offer that was limited to around 9,000 employees earlier this year. It’s all part of an ongoing effort to avoid reducing investment in AI infrastructure by lowering Microsoft’s operating costs and headcount.

“Our total people costs will go down, our cost per head will go up, and my GPU per researcher will go up,” Nadella said on a podcast almost two years ago, responding to a question about AI’s impact on headcount. That’s a financial way of saying Microsoft will have fewer people, but it will offer higher salaries and more tools and AI power to those who remain.

It’s hard to overstate Dan’s impact over the past 27 years. From shipping Project Gotham Racing on the original XBOX in 2001 to leading the creation of Forza, founding Turn 10 Studios and appearing so many times on our E3 stage, usually making a dramatic entrance with a supercar in tow – and so much more – we owe tremendous thanks and gratitude to Dan. On behalf of both teams, I would like to thank Dan for his leadership, his support, and his partnership. I wish him well for whatever comes next.

It also helps explain the continued layoffs we’ve seen at Microsoft over the past couple of years. Microsoft has been performing layoffs regularly over the past decade, but over the past couple of years, the layoffs and executive departures have been significant.

These aren’t the annual layoffs of old; they’re now happening every few months. This week’s voluntary exit offer arrived just months after Microsoft laid off 4,800 employees , cuts that impacted its Xbox and commercial sales teams the most.

For the first time in a decade, Microsoft’s overall headcount has also gone down year over year . Microsoft now employs around 223,000 people as of June 30th, 5,000 fewer than the 228,000 people it employed in 2025. Microsoft laid off 4 percent of its workforce in July last year, and it’s now offering voluntary buyout offers to around a quarter of its employees.