Latest / Minds, Bodies, and Terawatts / Microsoft Asked a Quarter of Its Workforce to Volunteer to Leave. It Is Growing 18% a Year, Says AI Isn't the Reason, and Reports to Wall Street Tonight

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Microsoft Asked a Quarter of Its Workforce to Volunteer to Leave. It Is Growing 18% a Year, Says AI Isn't the Reason, and Reports to Wall Street Tonight · Minds, Bodies, and Terawatts

• 0:00
  [Host] This is Minds, Bodies, and Terawatts, the show where the layoff comes with a checkbox. Reuters reported Monday that Microsoft is offering voluntary buyouts to about sixty thousand employees, more than a quarter of everyone who works there.
• 0:12
  [Guest] And they found out by email. The offer came in a memo Monday morning from the chief people officer, Amy Coleman, and by that night each eligible person had a link to their own personal terms.
• 0:24
  [Host] Who's eligible? A quarter of Microsoft can't just be the gaming studios.
• 0:28
  [Guest] Everyone at vice president level and below in the United States, Canada, India and Britain, inside the teams that chose to take part. Reuters' source says that includes the Copilot and AI teams, finance, human resources and Xbox, while marketing, the sales side and security sat it out.
• 0:45
  [Host] So the AI teams themselves can take the money and go.
• 0:48
  [Guest] They can, because each division head decided whether to hang the exit sign over their own floor. This is less a company-wide cut than sixty thousand individual invitations to leave.
• 0:58
  [Host] Say I'm one of them and the email just landed. What's in it, and how long do I have?
• 1:05
  [Guest] Until early December to say yes, and you're out at the end of the year. Business Insider says the terms are similar to Microsoft's standard severance, which earlier this year meant about a week of pay for every six months you'd worked there, for most ranks.
• 1:20
  [Host] Ten years gets you twenty weeks. Is that enough to make people say yes?
• 1:25
  [Guest] Microsoft doesn't think so. Seattle's public radio station, KUOW, reports the company expects a lower take-up than its retirement offer in the spring. That one came with richer terms, and still only about a third of the people eligible said yes.
• 1:39
  [Host] So it expects fewer than a third this time. Has Microsoft said how many it actually wants gone?
• 1:45
  [Guest] It has said how many may go. Sixty thousand is the size of the door, not the headcount walking through it, and nobody at Microsoft has to decide who does.
• 1:55
  [Host] Isn't that the humane version, though? Business Insider's source said the spring buyout is why fewer people got laid off outright this year.
• 2:02
  [Guest] It is more humane than a badge that stops working on a Monday morning. It is also quieter. A layoff has a number, a list and a reason, and a voluntary exit has sixty thousand private decisions the company never has to publish.
• 2:17
  [Host] Then let me ask the reason anyway. Is this AI taking jobs?
• 2:21
  [Guest] Depends who you ask. Reuters frames the buyouts as containing costs to help fund the AI buildout, and a Microsoft spokesperson told KUOW that AI is not driving the program.
• 2:31
  [Host] Those can't both be right.
• 2:33
  [Guest] They can both be right, because no model learned to do sixty thousand jobs over the weekend. What happened is a budget. Microsoft has told investors to expect about a hundred and seventy-five billion dollars of capital spending this year, and payroll is the one big line it can shrink without a wrecking ball.
• 2:51
  [Host] Is Microsoft short of money? It doesn't look like a company that needs to cut.
• 2:56
  [Guest] It isn't short of anything. Revenue grew eighteen percent last quarter, by its own report, and the AP notes the stock hit an all-time high this month.
• 3:05
  [Host] So a company at a record high is asking the people who got it there whether they'd like to leave?
• 3:12
  [Guest] And the first people to say yes are usually the ones with somewhere to go. A voluntary program doesn't select the company's weakest performers, it selects the most mobile ones, and Microsoft has priced the offer thin enough that it expects fewer of them.
• 3:26
  [Host] If I'm one of the sixty thousand, what am I actually weighing for the next few weeks?
• 3:32
  [Guest] Whether a thin package now beats the risk of a layoff later with no package at all. Microsoft told Business Insider there are no plans for another buyout at this time, and that is a sentence about buyouts, not about layoffs.
• 3:46
  [Host] And it has a track record here, doesn't it? The AP notes it cut forty-eight hundred jobs in July, after thousands more last year.
• 3:54
  [Guest] Which is why Coleman's memo reads the way it does. Her line is that the offer is new for Microsoft and the company will learn from it. Sixty thousand people are the experiment.
• 4:05
  [Host] What's tonight going to tell us?
• 4:07
  [Guest] Microsoft reports its quarter after the market closes Wednesday. The analysts will ask whether its cloud business, Azure, is growing fast enough to justify that spending. The sixty thousand will be listening for whether they are the margin.
• 4:20
  [Host] So the exit sign is lit over a quarter of the company, and nobody has to say who it's for.
• 4:27
  [Guest] By design, the company chose the size of the door, the people choose whether to walk through it, and whoever walks carries the reason out with them. For more on who pays for the AI buildout and how job cuts run ahead of the machines, head to unscarcity dot ai. The book is on Amazon, the audiobook is on Spotify. This has been Minds, Bodies, and Terawatts.