Microsoft's massive employee buyout spooked everyone. Here's what's really going on inside the company.

• Microsoft offered a buyout to 60,000 employees this week.
• The offer spooked the tech industry and stoked chatter and concern inside the company.
• The key question: How many employees Microsoft is prepared to lose?

Business Insider spent recent days speaking with Microsoft insiders to find out what’s really happening. The people asked not to be identified discussing sensitive matters.

The main takeaway so far is that Microsoft seems to have unnecessarily spooked employees with the sheer size of its buyout offer, leaving leaders scrambling to calm the troops.

Chief Financial Officer Amy Hood in an internal memo explained the offer was intended to “offer employees agency if they choose to leave the company on their own terms” and said the company expected “very few people” to accept.

Microsoft doubled down later and told Business Insider it anticipates 3,000 or fewer employees will take the buyout. That’s only about 5%, or less, of those eligible.

Layoff concerns

That’s led to speculation that more layoffs may come in the wake of this week’s bigger buyout offer.

“Future workforce needs will continue to be based on business needs and priorities,” Microsoft said in a statement.

Misconceptions and differences

Business Insider spoke to Microsoft executives who said there are misconceptions about the current buyout offer.

These executives could only speak about their own teams, and they were hesitant to definitively say layoffs aren’t coming. However, they pointed out a few differences between the current buyouts and the retirement offer.

“Microsoft doesn’t want to shrink by 60,000 people,” one executive said, while asking not to be identified. “We are not replacing everyone with AI.”

This person thinks Microsoft made latest buyout offer because some employees complained that they weren’t eligible for the retirement buyout earlier this year.

And in the case of the retirement buyout, when employees left, Microsoft didn’t fill those roles — the headcount went away.

This week’s buyout works differently. In some cases, when staff leave this time their roles will be backfilled with new hires.

Why the latest buyout looks so big

One reason the latest buyout looks so huge: Some leaders decided it would be simpler to offer it to their entire organization, rather than try to pick which specific teams or individuals should be included.

“It’s easier to opt-in giant organizations,” one Microsoft executive told Business Insider.

Charles Lamanna, the executive in charge of the Copilot Platform, AI agents, Office and Word, decided to offer it to everyone in his organization, one of the people said. That includes many people in critical positions. The organization is prepared to backfill roles if any of those critical employees accept the buyout, this person said.

The Cloud + AI group took a different approach

Microsoft’s key Cloud + AI division took a slightly different approach, according to another executive from the company.

Two teams — Azure Hardware Systems and Infrastructure and Cloud Operations + Innovation teams — decided not to offer the latest buyout to staff.

Most other groups within the Cloud + AI division did offer the buyout to employees. And this division can backfill some roles, this executive told Business Insider.

Cutting costs and avoiding layoffs

Backfilling roles could still help Microsoft cut labor costs. One executive at the company said if a senior person were to leave, they would likely backfill the role with someone more junior who would potentially be paid less. A Microsoft spokesperson said that’s not an official company position.

If all this seems overly complex, compared to layoffs, there may be a reason: Microsoft has been under fire for cutting American staff while employing foreign workers.

The Trump administration recently suspended Microsoft from a federal program that sponsors foreign workers for permanent residency, accusing the company of laying off American employees while hiring lower-paid foreign workers. Microsoft has denied those claims.

“Never say never, but there’s a lot of desire not to do big layoffs, especially as an American company,” one of the Microsoft executives told Business Insider.

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