The new layoff playbook? Why Google and Microsoft are betting on voluntary exits

The discussion has gained attention after Google employees asked the company to make voluntary buyouts the first step before any layoffs, as reported by Business Insider. Microsoft, too, introduced its first large voluntary retirement programme this year, with more than 30% of eligible employees choosing to accept the offer.

This comes as tech companies become larger, their workforces grow older, and artificial intelligence (AI) changes how businesses operate and where they invest.

Google employees want buyouts before layoffs

Earlier this month, nearly 100 Google employees gathered outside the company’s headquarters in Mountain View, California, asking the company to expand voluntary exit programmes. The Alphabet Workers Union also submitted a petition signed by more than 4,500 employees seeking stronger protections against layoffs.

Workers said voluntary buyouts should become the standard first step whenever Google plans to reduce jobs. They also argued that everyone in affected teams should get the option, regardless of how long they have worked at the company.

Voluntary buyouts “provide agency to workers,” said Emma Jackson, a Google employee of more than 20 years and a leader of the Alphabet Workers Union to Business Insider.

Jackson said some employees who were close to retirement may have chosen to leave voluntarily in earlier rounds, reducing the need for layoffs. She called the approach “more humane.”

The demand comes even as Alphabet continues to hire. The company recently said its workforce grew by nearly 12,000 employees over the past year, taking its total headcount to about 199,000 by the end of June.

Microsoft gives retirement packages

Microsoft introduced a voluntary retirement programme in April for US employees whose age and years of service added up to at least 70. More than 30% of eligible employees accepted the offer.

Employees who chose to leave received payments based on their years at the company and up to five years of healthcare coverage.

One employee who received the offer was Marisela Cerda, who joined Microsoft in 2001. Although she decided to stay, the offer made her think about the next stage of her career.

“You move toward what you want more of, versus moving away from things you don’t want,” she told Business Insider.

Why companies are considering buyouts

Experts say voluntary exits are becoming more common because many tech companies now have employees who have spent decades at the company.

“Buyouts are becoming increasingly compelling for older Silicon Valley companies,” said Laszlo Bock, Google’s former head of human resources told Business Insider. “They have more eligible people, and it’s a softer message for morale.”

Buyouts also have challenges

Experts say voluntary exits are not always the best solution. Jay Zagorsky, a professor at Boston University’s Questrom School of Business, said companies cannot predict how many employees will accept the offer.

The growing interest in buyouts comes as the technology industry goes through another major round of restructuring.

Thousands of tech jobs have already been cut around the world this year, especially in the US. The layoffs have affected cloud computing, software, e-commerce, semiconductors and IT services.

Many companies say the cuts are linked to AI as they shift spending toward AI models, data centres, chips and automation instead of expanding their workforce.

Google’s strategy is different

Google has avoided one large round of layoffs this year. Instead, it has made smaller cuts across different teams and offered voluntary exit packages in several business units, including Platform and Devices, Android, Chrome, Pixel and parts of its business organisation.

The company is reducing jobs in some areas while continuing to invest heavily in AI. At the same time, Google has also lost several well-known AI researchers to competitors, showing that while it is cutting some roles, it is still competing hard to keep top AI talent.