In 2025, tech giants Microsoft and Amazon are adopting bold tactics to streamline their workforces, offering financial incentives to underperforming employees to resign voluntarily. This move marks a departure from traditional layoffs, aiming to boost efficiency and morale while avoiding the backlash of mass terminations.
At Microsoft, the strategy aligns with CEO Satya Nadella’s push for agility in a competitive AI-driven market. Sources indicate the company is offering severance packages to employees rated as low performers, encouraging them to leave without the stigma of firing. The approach is selective, targeting those who fail to meet performance benchmarks, with payouts varying based on tenure and role.
Amazon, meanwhile, is doubling down on its performance-driven culture. The company has expanded its “Pay to Quit” program, initially popularized by Zappos, offering lump-sum payments to employees who opt out voluntarily. Insiders say Amazon is targeting workers in its sprawling logistics and corporate divisions, where inefficiencies have been flagged. Payments reportedly range from a few thousand dollars to six-figure sums for senior staff, incentivizing exits without forced cuts.
The strategy isn’t new but reflects a broader trend in tech to trim bloated workforces post-pandemic. Both companies hired aggressively during 2020-2022, only to face economic headwinds and overstaffing. Unlike blunt layoffs, which risk PR fallout and legal challenges, paying employees to leave is seen as a softer, more strategic pivot. It also sidesteps the morale hit from prolonged performance improvement plans (PIPs), which often lead to resignations anyway.
Critics argue this approach could disproportionately affect marginalized groups or older workers, who may feel pressured to accept payouts. Others see it as a pragmatic way to realign talent with business goals, especially as AI and automation demand higher-skilled roles. Data from industry analysts suggests voluntary severance programs can cut costs by up to 20% compared to traditional layoffs, with less disruption.
Microsoft and Amazon aren’t alone. Other tech firms are quietly exploring similar programs, signaling a shift toward leaner, performance-focused teams. As competition intensifies, the pressure to optimize human capital is reshaping how Big Tech manages its workforce.