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Microsoft is spending huge sums on data centers, chips, and other infrastructure to meet the growing demand for artificial intelligence (AI) technology. Even as it invests tens of billions of dollars in AI, the company has moved to cut roughly 60,000 employees at once. It has already begun offering voluntary exit packages to workers in certain roles in the United States, the United Kingdom, Canada, and India.
As of last June, Microsoft had about 223,000 full-time employees worldwide. By that count, nearly one-quarter of its total workforce could be covered by this program. The offer is being made to employees at level 70 or below. Those who accept are expected to receive three months' salary in advance, plus an amount equal to one month's base pay for each year of service.
Amy Coleman, Microsoft's Executive Vice President and Chief People Officer, said in a message to employees last Monday: "This voluntary exit offer is an important part of our strategy for adapting to change. It gives employees more flexibility and, where possible, the opportunity to choose the next chapter of their careers for themselves."
Why Cut Jobs While Increasing AI Investment?
Investors are worried about whether Microsoft's massive investment in meeting AI demand will bring the expected returns. For this reason, Microsoft is trying to cut costs and restructure its workforce in step with the rapid spread of AI. However, it is still unclear whether the company is reducing headcount because AI has raised productivity, or whether it is doing so to absorb the cost of its huge investment in AI infrastructure.
Earlier this year, Microsoft offered voluntary exit packages to about 9,000 employees in the United States. More than 30 percent of those who received the offer accepted it. Microsoft said the new offer was designed based on lessons learned from the earlier voluntary retirement program.
Last July, Microsoft announced it would lay off about 4,800 employees, roughly 2.1 percent of its global workforce. At the same time, it also announced a restructuring of its Xbox gaming business and plans to sell five game studios.
Other major technology companies around the world are also spending heavily on AI infrastructure. Their combined spending in this area could reach $650 billion in 2026, which is more than the GDP of most countries. According to a forecast by market research firm Gartner, if AI revenue does not grow as expected, more than $3.5 trillion worth of AI infrastructure investment could lose value by 2030.
Source: The Indian Express