The pros and cons of offering voluntary buyouts to employees

Voluntary buyouts are gaining momentum in Big Tech.

On Monday, Microsoft offered the exit packages to several of its workforce for the second time this year, its latest attempt to slim its workforce without layoffs. In April, the business launched its first broad voluntary withdrawal program, offering packages to thousands of longtime US employees.

The developments are raising broader questions in tech, anywhere many once-scrappy startups are now sprawling corporations — and anywhere repeated rounds of layoffs have eliminated scores of jobs in latest years.

Now that many tech companies have workforces that contain workforce alongside decades of service, are buyouts — long part of the workforce-reduction playbook at bequest companies from Boeing to General Motors — a fairer, small achy way to decrease caput figure than layoffs? And should they remain reserved for seasoned employees, as they traditionally have been, or be offered additional widely?

"Buyouts are becoming increasingly compelling for older Silicon Valley companies," stated Laszlo Bock, a erstwhile Google caput of individual resources who now advises CEOs. "They have additional eligible people, and it's a softer communication for morale."

A 'more humane' approach

Nearly 100 Google workforce rallied in July exterior the company's Mountain View headquarters, arguing that the company's former use of selective exit offers have to be made a broader, additional accordant policy. As part of the event, the union presented a petition signed by additional than 4,500 Googlers calling for improved layoff protections.

Voluntary buyouts "provide agency to workers," Emma Jackson, a Google employee of additional than 20 years and a chief of the Alphabet Workers Union, earlier told Business Insider. Alphabet is Google's genitor company.

Jackson stated workers nearing withdrawal power have accepted buyouts in before rounds of layoffs at Google, reducing the figure of cuts needed. She called the method "more humane."

Google didn't react to a petition for comment from Business Insider. Alphabet stated in July that its workforce had grown by nearly 12,000 workforce complete the previous year, reaching concerning 199,000 at the end of June.

With Microsoft's latest voluntary buyouts, the business stated about 60,000 workforce — or additional than a fourth of its workforce — volition be eligible and that the conditions volition be akin to its norm severance. They volition have until first December to decide whether to obtain the recommendation and exit at the end of the year, and there are no plans for another buyout at this time, a spokesman said.

Microsoft made its voluntary withdrawal program accessible to workforce whose age and years of assistance added up to at smallest 70, definition several could meet requirements fine before a accepted withdrawal age.

At 47, withdrawal wasn't on Marisela Cerda's radar. Yet Cerda, a chief client cognition director at Microsoft who joined the business following college in 2001, was among those who received an exit recommendation this former spring.

Although she ultimately decided to stay, Cerda earlier told Business Insider that she stuck about as lengthy as she has since of the chance to keep learning concerning emerging technologies and the relationships she has built alongside colleagues. The recommendation prompted Cerda to think additional urgently concerning the next phase of her career.

"You move toward what you desire additional of, versus moving distant from things you don't want," she earlier said.

Why the calculus may be changing

As Silicon Valley companies develop older alongside their workforces, buyouts may develop additional attractive, stated Josh Bersin, an HR expert and consultant. Forcing seasoned workforce to depart through layoffs "creates a lot of bad blood," he said.

Peter Rahbar, a New York occupation attorney and cohost of the "Across the Bar" podcast, stated buyouts power not decrease personnel as quickly as layoffs, but they don't transport the identical "huge" morale expenses for those who remain — or for possible forthcoming hires.

"How you treat group on the way out is certainly item group appearance at on the way in," he said.

There are downsides for employers, however. Offering buyouts can create labor reductions small predictable, stated Jay Zagorsky, a prof at Boston University's Questrom School of Business. If too few workforce accept, a business may motionless need to create cuts to attain its target.

"With a layoff, there's certainty," he said.

Extending buyout offers to everyone, including those who've logged lone a few activity anniversaries, additionally carries drawbacks.

"People whom you would favor to remain power leave," and they could go to a competitor, stated Bock, the erstwhile Google executive.

The hazard is particularly concerning for companies alongside what he calls "spiky talent," anywhere a small figure of workforce create disproportionate value.

For workers who obtain a buyout offer, Rahbar, the occupation attorney, stated they should comprehend how accepting it would power their withdrawal benefits, inventory awards, deferred compensation, and healthcare coverage. Depending on a company's plans, workforce who quit may continue vesting in certain benefits or keep those they have already earned, he said.

Buyout packages additionally lean to be additional generous than the severance offers, Rahbar added, and there's an affectional difference between choosing to depart and being told to go.

"People are emotion fine concerning leaving on their own terms," he said. "With a layoff, they're plainly not."

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An before type of this narrative appeared on July 27, 2026.