Job cuts, retirement plan, voluntary exits: What’s going on at Microsoft?

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Updated - October 29, 2026 01:37 pm IST - Chennai

While Microsoft has not explicitly linked the latest programme to AI-driven job displacement or cost savings, its workforce announcements, financial disclosures and account of its internal AI transformation provide context for the decision. (Illustration for representation purpose only) | Photo Credit: Reuters

The story so far: Microsoft has introduced a voluntary exit offer for eligible employees in India, the United States, the United Kingdom and Canada, as the technology giant expands its artificial intelligence (AI) business and changes how work is organised.

In an October 26 announcement, Amy Coleman, Microsoft’s executive vice-president and chief people officer, said the offer would give eligible employees considering leaving the company financial support and career-planning resources.

The programme is available to employees in selected teams, with participation depending on business priorities, customer commitments and workforce needs.

The latest offer follows two earlier workforce measures, such as the elimination of around 4,800 roles and a Voluntary Retirement Program in which more than 30% of eligible employees chose to participate.

Microsoft has not disclosed how many employees it expects to leave under the new offer.

While the company has not explicitly linked the latest programme to AI-driven job displacement or cost savings, its workforce announcements, financial disclosures and account of its internal AI transformation provide context for the decision.

Microsoft is restructuring even as its business grows.

In its fiscal 2026 results, the company reported revenue of $331.8 billion, up 18% from the previous year, and operating income of $155.2 billion, up 21%.

Kamal Karanth, co-founder of specialist staffing firm Xpheno, described Microsoft’s voluntary exit offer (VEO) as “a timely manpower optimisation move” against the backdrop of operational efficiencies achieved over the last four fiscal periods.

He said enterprises strive for “non-linear scale and growth on manpower to revenue ratios”, and Microsoft appears to have achieved this over the last four years.

According to the four-year comparison he shared, Microsoft’s revenue grew 79.7% and its headcount rose 68.7% between FY2018 and FY2022.

Between FY2022 and FY2026, revenue grew 67.4%, while headcount increased just 0.9%.

“Achieving a 68% growth in revenue with less than 1% net growth in headcount over the last 4 fiscals, denotes an operational excellence in play,” he said.

Mr.

Karanth said Microsoft had got several things right, including its “product and revenue mix, client mix, quality and pedigree of talent, AI tech stack impact on productivity, and efficiency of Cloud and AI infrastructure”.

Comparing the two periods, he described the shift as “a successful switch up to non-linear scale and efficiency”.

He said the efficiencies achieved so far provided “sufficient headroom for the company to slim down, optimise headcounts and improve output efficiencies as AI matures further”.

In a July 6 announcement about job cuts, Ms.

Coleman said the company was eliminating around 4,800 roles, about 2.1% of its global workforce, as it aligned its workforce and investments with changing business priorities.

She said Microsoft had redeployed more than 4,000 employees into new roles over the preceding year.

Ms.

Coleman added that the roles being eliminated in that round were not being replaced by AI, while acknowledging that AI was changing how work was done.

Microsoft’s financial disclosures show rising expenditure on research and development and infrastructure as it expands its AI and cloud businesses.

In its fiscal 2026 annual report, the company said research and development expenses rose 9% to $35.6 billion, from $32.5 billion in the previous year.

The company attributed the increase to continued investment in computing capacity, AI talent and data to support product development, as well as impairment and related expenses in its Xbox business.

The report also showed that the cost of revenue in Microsoft’s Intelligent Cloud business rose 44% to $57.9 billion in fiscal 2026.

Microsoft attributed the increase to investment in AI infrastructure to meet growing customer demand.