It’s been a tough year for tech workers. About 92,000 employees have been laid off by tech companies as they look to cut overhead costs and invest heavily in AI.
Meta announced Thursday that it plans to cut 10% of its jobs, or about 8,000 employees, to improve efficiency and offset its AI spending. The social media giant also plans to leave 6,000 open roles unfilled.
Microsoft also announced plans to cut its workforce on Thursday, but is taking a different approach: first-time buyouts for experienced workers. The company is offering voluntary separations to more than 8,500 employees — 7% of its U.S. workforce — whose years of service and age total 70 or more.
In the past, Microsoft has not been shy about laying off employees and cutting 15,000 jobs last year. But management is jumping on the increasingly common trend of offering people voluntary separation rather than letting them go, said Domenic Camacho Moran, a lawyer and partner at the employment law firm Farrell Fritz. His firm represents Fortune 500 companies, large universities, and many middle market businesses.
A buyout is a way to support good and loyal workers and ultimately avoid the devastating blow of job cuts. In contrast, layoffs can be more complex, requiring an assessment of each employee’s skill set and performance to avoid litigation risk, Moran said.
“The voluntary exit option gives the employer the ability to say, ‘Not because you’re not doing a good job, but if you’re thinking it’s time for me to move on. I would encourage you to do that because we need to cut some staff,'” she said.
According to Moran, the growing popularity of buyouts speaks to businesses deciding they need fewer employees due to AI and financial pressures.
Microsoft is expected to invest $145 billion in capital spending this fiscal year as part of a wave of $700 billion in capital spending by 2026 from big tech companies racing to take the lead in AI.
“What they’re trying to do is make sure they work more lean and more efficiently,” Moran said of Microsoft. “They find that the people they have are the ones who are doing the jobs they need, maybe at very high prices.”
Microsoft declined to comment on the purchase.
Employee Choice
For those on the opposite end of buyouts, they can be attractive to employees looking for a transition, under-performers who fear being laid off, or people who think they can find another good job, she said. Employees can take advantage of the waiting period to find a different job before deciding to leave on their own terms.
