# Microsoft's buyout plan could take headcount below pre-pandemic levels

Markdown copy of https://realalpha.app/s/microsofts-buyout-plan-could-take-headcount-below-pre/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Ed Elson](https://realalpha.app/people/ed-elson/) (Host)
- Show: Prof G Markets
- Episode: [Microsoft Rises, Google Tanks: Why Investors Are Polarized On Big Tech](https://realalpha.app/v/hlS_LWOZsNU/), Oct 29, 2026
- Moment: 31:21 to 34:53 of the episode (4 min), playing on https://realalpha.app/s/microsofts-buyout-plan-could-take-headcount-below-pre/; the episode from there: https://realalpha.app/v/hlS_LWOZsNU/?t=1881

## Quote

> “If Microsoft actually eliminates 27% of its workforce, like they're suggesting, then their total headcount will actually be **lower than what it was** before the pandemic.”
> — [Ed Elson](https://realalpha.app/people/ed-elson/) at [32:49](https://realalpha.app/v/hlS_LWOZsNU/?t=1969) · Prof G Markets

## Takeaways

1. Microsoft added almost 60,000 employees in two years after COVID.
2. A 27% workforce reduction would put headcount below pre-pandemic levels.
3. Ed sees this as evidence of AI's impact on tech workers.

## About this segment

Ed Elson compares Microsoft's proposed 27% workforce buyout with its pandemic hiring and pre-pandemic headcount. He argues the scale points to AI-driven workforce reduction, not just a cyclical correction.

From “Microsoft Rises, Google Tanks: Why Investors Are Polarized On Big Tech”, Oct 29, 2026. [Watch the full episode](https://realalpha.app/v/hlS_LWOZsNU/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[31:34](https://realalpha.app/v/hlS_LWOZsNU/?t=1894) In addition to earnings, Microsoft has also announced that it will be offering voluntary buyouts for 27% of its global workforce. In simpler terms, the company is about to pay nearly a third of its employees to leave. And why would they do this? Well, probably because of AI. Back in July, Microsoft announced nearly 5,000 layoffs, citing that AI is, quote, changing how work gets done. And since then, the company's AI investments have only gotten larger.

[32:04](https://realalpha.app/v/hlS_LWOZsNU/?t=1924) Capital expenditures for the September quarter should exceed $50 billion. And you have to think that those commitments are crowding out payrolls. In other words, it seems like AI is taking jobs. At the same time, though, there has been some compelling pushback to this AI's taking-your-job narrative. Because, yes, tech companies are announcing layoffs across the board. But at the same time, most of these companies significantly overhired during the pandemic.

[32:34](https://realalpha.app/v/hlS_LWOZsNU/?t=1954) Microsoft, for example, added almost 60,000 employees in just two years after COVID. So it is possible that these layoffs aren't actually about AI. it's possible that this is just a regular cyclical correction, some natural return to normal. But there is one key fact about this round of my... Microsoft layoffs that makes me question that argument, and that is the following. If Microsoft actually eliminates 27% of its workforce, like they're suggesting, then their total headcount will actually be lower than what it was before the pandemic.

[33:13](https://realalpha.app/v/hlS_LWOZsNU/?t=1993) Put another way, that doesn't look like a correction to an overhiring problem. That actually looks like a structural consequence of AI. Now, some people will argue that it isn't the actual AI that's replacing the workers, but that it is the cost of the AI that's replacing the workers. After all, the more they spend on data centers, the less they might be willing to spend on employees. And, you know, that makes sense.

[33:39](https://realalpha.app/v/hlS_LWOZsNU/?t=2019) That might be true. But I would respond with the following question. What's the difference? Regardless of what aspect of AI is replacing tech workers, the reality is that it seems that tech workers are getting laid off because of AI. The more layoff announcements we see, the more that seems to be true. Now, to be clear, that doesn't mean AI is getting rid of all jobs. In fact, its impact on the overall job market in the US has been almost negligible. But it does appear that for this specific job in this specific sector, it is beginning to have an impact. How long will that last? I don't know. And if this whole AI thing doesn't work out, you can be sure they will go back to employing humans. But that doesn't negate the fact that these companies are at the very least trying to replace workers with AI. That is the objective, and this announcement

[34:35](https://realalpha.app/v/hlS_LWOZsNU/?t=2075) is an admission of that goal. Okay, that's it for today. This episode was produced by Claire