Google’s Tech Buyouts Quietly Redefine Silicon Valley Workforce Cuts
TECHJOB MARKET
Voluntary Exits Replace Mass Layoffs in Silicon Valley
A growing number of Silicon Valley companies are shedding jobs without making headlines. Instead of mass layoffs, firms like Google, Amazon, Microsoft, and SAP are quietly pushing employees out through buyout programs marketed as voluntary. These programs offer generous severance packages to workers deemed misaligned with evolving priorities—especially those not seen as essential to new AI-driven strategies.
In 2025, economists estimate that up to one-third of resignations in Silicon Valley were not truly voluntary but the result of negotiated exits. Workers who accept these deals are officially counted as having quit, not as being laid off. As a result, U.S. labor market data fails to capture the real scale of downsizing in the tech sector.
This shift reflects a broader strategy: avoid the legal, reputational, and financial risks of traditional layoffs while quietly trimming headcount. Google, for example, after cutting 12,000 jobs in 2023, moved to a "Voluntary Exit Program" that offered at least 14 weeks of base pay, an additional week per year of service, accelerated stock vesting, and six months of health coverage. The program initially targeted Google's Platforms and Devices group—about 25,000 employees—and later expanded to the Knowledge and Information group and several core teams.
Similar tactics are being used at Amazon, where employees resisting return-to-office mandates have been offered three months of pay plus a week for every six months of service. Microsoft, too, reportedly gives 16 weeks of base pay to low-performing employees willing to resign, avoiding formal terminations.
The Tech Job Market Becomes Harder to Track
This new model of workforce reduction has implications far beyond corporate balance sheets. Because voluntary exits are not reported as layoffs, they distort official employment figures. The U.S. Department of Labor counts buyouts as resignations, not involuntary separations, meaning that many job losses are invisible in public datasets.
Layoffs.fyi, which tracks job cuts in the tech industry, reported that by mid-May 2025, at least 61,000 jobs had been eliminated across 130 companies—already more than in 2020 and closing in on the 2024 total. However, this figure likely undercounts the true number, as it excludes many voluntary exits.
Google alone reportedly offered the program to around 45,000 employees. If just 10% accept, the cost of severance could surpass $550 million, based on an average payout of $220,000 per employee. SAP allocated €2 billion to restructure or eliminate 8,000 roles, averaging €250,000 per affected worker. Verizon recorded a $1.9 billion charge in 2024 to fund the exit of 4,800 employees—nearly $396,000 per person.
Despite these high costs, executives argue that voluntary exits are more predictable and cheaper than potential wrongful termination lawsuits, drops in morale among remaining staff, and reputational damage from abrupt mass layoffs. In the U.S., legal disputes can lead to severance settlements ranging from $40,000 to over $1 million in jury trials.
AI Strategy Drives Tech Workforce Realignment
Behind this shift is a broader transformation of how tech companies view talent. With AI adoption accelerating, firms are restructuring their workforces to align with new priorities. Google’s internal memos describe the buyout offers as opportunities for employees who are “not fully aligned” with the company’s AI-focused direction. The underlying assumption is that these employees are statistically less productive under the new model.
This logic helps explain why firms are willing to spend hundreds of millions of dollars to incentivize exits. Alphabet plans to redirect $500 million in payroll savings from these exits toward developing custom AI accelerators. Microsoft pays its AI engineers an average of $350,000 annually—about 40% more than standard software developers. Replacing legacy staff with specialized AI talent becomes financially viable when voluntary severance costs are capped and predictable.
But the model carries risks. Some high-performing employees also accept buyouts, using the severance as a runway to launch startups—taking strategic knowledge with them. Others may reduce productivity in anticipation of future offers. Meanwhile, shareholders are concerned about rising stock-based compensation expenses due to accelerated vesting.
The strategy also exacerbates labor market inequities. Experienced workers may walk away with nearly $90,000 in base pay alone, while younger employees with less tenure receive far less—despite facing a more challenging job market. Software developer postings have dropped 33% over the past five years, and tech hiring overall has slowed.
Voluntary Exits Shift Costs, Blur Accountability
While these buyouts offer discretion and financial control, they come with a cost to transparency. California lawmakers have proposed legislation requiring greater disclosure around voluntary severance programs, citing concerns that current reporting standards conceal the scale and nature of job losses.
In many cases, affected employees are not eligible for public unemployment benefits or reskilling programs, since their departures are technically classified as resignations. This creates a blind spot in workforce data and a gap in support services for displaced workers.
Meanwhile, investors often reward these moves. When Bloomberg confirmed small layoffs in Google Cloud, Alphabet’s stock rose 2.3%. According to Morgan Stanley analysts, reducing the workforce by just 1% could boost annual operating margins by 22 basis points, provided severance stays under $1 billion.
This financial logic is now embedded in the operations of several tech giants. Performance Improvement Plans (PIPs), once used to justify firings, are now part of a broader toolkit that includes buyouts and reassignments disguised as “talent mobility” or “realignment.” In 2023, the Wall Street Journal reported a rate of 43.6 employees per thousand placed on PIPs, many of whom resigned before being officially terminated.
A New Default for Workforce Management
Voluntary exits have become the default strategy for headcount reduction in tech. The combination of strategic framing, generous packages, and off-the-books status makes them attractive to companies navigating post-pandemic uncertainty, AI disruption, and shareholder expectations.
The model's staying power will likely depend on two variables: the speed of AI adoption and the availability of specialized tech talent. If AI continues to automate mid-level functions, companies will need flexible, low-friction ways to reshape their workforces. If that talent becomes harder to find, retention bonuses may replace severance offers.
For now, voluntary buyouts remain a potent tool for quietly redrawing the tech employment map—one that’s increasingly out of sync with the job market metrics the public sees.