Microsoft’s first-ever large-scale voluntary retirement programme is becoming one of the company’s biggest workforce restructuring efforts in years, with reports suggesting that around 8,750 employees in the US could be affected as the tech giant increases spending on AI. The programme, which targets long-serving mid- and senior-level workers, comes with unusually generous exit packages that include up to nine months of salary, extended healthcare coverage, and additional stock vesting benefits, reports The Verge. Microsoft is expected to take an almost $900 million charge tied to the move.
The latest disclosures provide a clear picture yet of how aggressively the software giant is reshaping its workforce. The programme is available only to employees who meet Microsoft’s internal ‘Rule of 70’ eligibility condition. Under the formula, a worker’s age and years of service combined must total at least 70. It means a 50-year-old employee with 20 years at Microsoft or a 55-year-old employee with 15 years at the company would qualify. The offer mainly targets employees at Levels 64 to 67 – categories that generally include experienced managers, senior programme leads, architects, and long-serving technical employees. Senior director-level executives and employees above those levels are reportedly excluded from the programme.
Reports indicate that around 7% of Microsoft’s US workforce qualifies for the retirement offer. Notably, the Satya Nadella-led firm employed around 228,000 people globally as of mid-2025, including about 125,000 employees in the United States. And based on these figures, about 8,750 workers could potentially participate in the programme. Employees eligible for the programme reportedly have only 30 days to make a decision.
The financial package being offered is unusually large compared to standard severance programmes in the technology sector. Employees at Microsoft’s Level 64 classification are being offered one week of base salary for every six months worked at the company. Employees in Levels 65 through 67 will receive two weeks of pay for every six months of service. In both cases, the payout is capped at 39 weeks of base salary, equivalent to around nine months of compensation. For many long-serving Microsoft employees, especially those receiving high salaries and stock compensation, the total payout could run into six figures.
Healthcare benefits are another major part of the package. Microsoft will provide access to medical, dental, vision, and wellness coverage for up to five years after retirement. However, the company will fully pay for only the first year of coverage. Employees choosing to continue healthcare benefits during the remaining four years will need to pay monthly premiums themselves. The company is also using stock compensation to encourage participation. Employees taking the voluntary exit package will continue receiving vesting benefits on unvested stock awards for an additional six months after leaving Microsoft. Workers with 24 years or more of continuous service may receive up to 12 months of additional stock vesting.
Meanwhile, reports also suggest that the $900 million charge attached to the programme could be split between about $350 million in cost of revenue and around $550 million in operating expenses.
The restructuring comes as Microsoft sharply increases AI-related spending. The company expects capital expenditure to exceed $40 billion in the current quarter alone, largely driven by AI data centres, cloud infrastructure, and computing capacity expansion. At the same time, the AI business itself has become a major revenue engine for the firm. The company recently said its AI-related business had reached an annual revenue run rate of $37 billion, growing more than 120% year-over-year. Azure cloud revenue also rose about 40%, driven by demand for both AI and non-AI workloads.
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