Amid AI shift, tech firms like Microsoft cut staff and alter pay

Tech companies are cutting jobs to focus on AI with Microsoft the latest to announce buyouts. — dpa

SAN JOSE: Microsoft is rolling out voluntary buyouts for some of its US employees, a first for the 51-year-old tech giant as it adjusts to the rapid advancements in artificial intelligence (AI).

The one-time retirement programme is open to eligible workers at the senior director level and below who have a combined age and years of service totalling at least 70.

Some 7% of Microsoft's US workforce meets this criterion, as per a source familiar with the situation.

Employees are set to receive detailed information on May 7, but those on sales incentive plans won't qualify.

The initiative comes as Microsoft increases its spending on data centres to meet the rising demand for AI-driven cloud services, a trend that's also being seen in companies like Alphabet and Amazon.

At the same time, the software industry as a whole is facing challenges, especially with new AI coding tools from firms like Anthropic potentially upending traditional business models.

Microsoft has already taken measures to reduce expenses, including several rounds of layoffs last year. By June 2025, the company had around 228,000 employees worldwide, with roughly 125,000 in the US.

Alongside the buyouts, Microsoft is also adjusting its employee compensation structure. Managers won't have to tie stock awards directly to cash bonuses anymore, giving them more flexibility to recognise performance. Plus, the company is simplifying its performance review system, cutting the number of pay options for managers from nine to five.

These changes underscore Microsoft's ongoing efforts to streamline operations and shift resources as it prepares for long-term growth in the AI age.

The news comes as US tech giant Meta prepares to cut 10% of its workforce next month as it invests heavily in AI, according to local reports.

The company, which owns social media sites such as Facebook and Instagram, told employees in an internal email that the major round of redundancies is to be made on May 20, US media reports say.

Meta had just under 79,000 employees at the turn of the year, meaning the cuts are likely to affect nearly 8,000 people. In addition, some 6,000 vacant positions will not be filled.

The reason given for the redundancies was a desire to make the company more efficient and balance expenditure.

Meta is investing heavily in artificial intelligence infrastructure. For this year alone, capital investments of between US$115bil (RM454.5bil) and US$135bil (RM533.59bil) have been promised. – dpa