For the first time in its 50 years of existence, Microsoft has decided to launch a voluntary retirement program for employees in the US, and through this move the company will try to reduce costs at the time of huge investments in AI infrastructure and data centers.
According to information that has emerged internally within the company, employees whose combined years of life and service at Microsoft are 70 or more will be able to voluntarily accept a retirement package.
Microsoft is changing its cost structure due to the AI era
The package that Microsoft offers includes as much as five years of access to health insurance, a one-time cash severance package, as well as accelerated “notification of actions” that were not yet available to employees.
During the first year, the company will fully cover the costs of health, dental and additional insurance, while the employees will pay the monthly premiums themselves for the next four years.
The amount of severance pay will depend on the employee’s position in the company. Mid- and senior-level employees will receive one or two weeks of basic pay for every six months of service, with a maximum limit of 39 weeks of pay.
Microsoft additionally offers accelerated unlocking of actions. Employees will receive six months of additional notification of unused stock options, while those with 24 or more years of continuous work will receive even 12 months of additional notification.
Estimates are that about seven percent of Microsoft employees in the US are eligible for this program, which represents approximately 8,750 people.
The move comes at a time when the biggest tech companies are aggressively investing tens of billions of dollars in AI infrastructure, developing new data centers and buying specialized AI accelerators. This is precisely why more and more companies are trying to simultaneously optimize operating costs and restructure long-term obligations to employees.
Microsoft has already confirmed that it will record a cost of around $900 million during the current quarter due to this one-time program. It is interesting that some analysts state that this is approximately equal to the revenue that the company generates today in just one day of business, reports The Verge.