Tech giant Microsoft is offering a voluntary exit programme to its 60,000 eligible employees in US, UK, Canada and India, seen apparently as a causal effect of the company’s heavy investment into artificial intelligence, even as India’s techforce has demanded waiving off income tax on the severance benefits.
In a blogpost on Monday, Microsoft claimed that the “time-limited” voluntary program offers eligible employees “an opportunity to leave Microsoft with financial support and career planning resources.”
Microsoft has a workforce of over 22,000 employees across Bengaluru, Hyderabad, Pune, Gurugram, Noida and other Indian cities.
Many are now demanding from the Union Finance Minister Nirmala Sitharaman that the income tax on severance package should be waived off temporarily.
“Usually what happens in the industry is that if they don’t accept the voluntary exit offer, they are subsequently laid off. When you get laid off, separation benefits are not provided. Though called voluntary, in all likelihood these 60,000 people would have no option but to leave the company. At least from now on, the Finance Minister should consider not taxing severance benefits,” wrote Investment Adviser Muthukrishnan Dhandapani on X.
Rarely tweet at this time.
When my sleep got disturbed, I looked at the phone.
Microsoft is laying off 60,000 employees, 27% of its workforce across the world. This includes India as well.
The term used is Voluntary Exit Offers (VEOs).
Mails are already out to these employees.
They are offered some separation benefits and asked to leave.
Usually what happens in the industry is that if they don’t accept the voluntary exit offer, they are subsequently laid off. When you get laid off, separation benefits are not provided.
Though called voluntary, in all likelihood these 60,000 people would have no option but to leave the company.
At least from now on, the Finance Minister should consider not taxing severance benefits.
Suddenly overnight, a huge number of employees in one of the world’s largest companies are facing an uncertain future.
Already Oracle, including their Indian operations, has laid off a huge number of people.
The trend is expected to follow.
At least now you would understand why I’ve been saying for the last couple of years to create safe money worth 3 years of living expenses and not to go for any loans, including buying a house.
The impact of IT professionals losing jobs would start showing on premium consumption, real estate prices and reduced demand across the economy.
As I said, things would become worse before they become better.
Newer industries and opportunities would come in the future. But the transition period is going to be painful.
— Muthukrishnan Dhandapani (@dmuthuk) October 26, 2026
After Oracle trimmed its workforce by 18% earlier in April this year, the Microsoft “voluntary exit programme” will be the second largest job-market shake-up for the tech talent pool in India. Earlier,
Former MP and Telangana Jagruthi president Kavitha Kalvakuntla had also demanded for a one-time waiver on income tax levied on severance packages of 12,o00 Indian employees who were laid off by Oracle.
While the exit programme is voluntary as per Microsoft, many market pundits claim that it puts the eligible employees under “catch-22” situation as what usually follows post voluntary exit programme is compulsory lay-offs sans any benefits.
In India, global companies typically provide a Notice Period (N) + 2 months package but they can vary according to employment contracts, company policies and the circumstances of separation. Under Section 18 of the Income-tax Act, 2025, compensation received in connection with the termination of employment is generally treated as “profits in lieu of salary” and is taxable, subject to applicable exemptions. The tax liability depends on the nature and amount of the payment, the employee’s total taxable income and the applicable tax regime.
Microsoft had announced a total investment of approximately $80 billion for AI enabled data centers in FY2025 while in FY2026, the company expects to spend $190 billion for total capital expenditure including AI investments.
Also Read: “I Helped AI Learn My Work”: Ex Oracle Employees on the Layoff They Never Saw Coming
