Microsoft offers to relocate nearly 10% of China-based staffers to the US or allied nations — AI and cloud engineering exodus from China begins

Microsoft is asking nearly 10% of its China-based workforce to move to the U.S., Ireland, Australia, or New Zealand. According to Reuters , most affected workers are Chinese engineers working in the company’s machine learning and cloud computing divisions — key battlegrounds that the U.S. and China are vying for in their bid to gain technological supremacy .

This announcement came soon after the White House’s press release announcing increased tariffs on high-tech Chinese goods and can be seen as Microsoft’s reaction to keep the U.S. government happy. However, a Microsoft spokesperson said in an emailed statement to Reuters that this was just a routine business move.

“Providing internal opportunities is a regular part of managing our global business. As part of this process, we shared an optional internal transfer opportunity with a subset of employees,” Microsoft said in its email. The spokesperson also added that “Microsoft remains committed to China and will continue to operate there and other markets.”

Although the company did not confirm how many employees received the transfer opportunity, internal sources say it affects 700 to 800 people. This is a substantial number of Microsoft’s China-based workforce. The Global Times reported in 2022 that Microsoft already had more than 9,000 full-time workers and was expected to hire over a thousand more in the following year.

There is no telling how many offers will be accepted, especially as this is optional for the employees. But even if a small number only accepts Microsoft’s proposal, this is a potential brain drain of China’s top talent, especially given their highly niche specialties. After all, many former Microsoft employees eventually became leaders in top Chinese tech firms, including Baidu and TikTok-owner ByteDance.

Microsoft’s heavy presence in China has invited scrutiny from American lawmakers. In a March 2024 letter to U.S. Commerce Secretary Gina Raimondo, U.S. Representative Pat Fallon said, “What we seek to understand is if and how Microsoft’s broad usage across the U.S. federal government, close ties to [the People’s Republic of China]’s government and compliance with intrusive PRC laws threatens U.S. national and economic security.”

He then adds, “No U.S. company should be playing a role in supporting the Chinese government. It is critical that any such efforts be stopped, and that broader Chinese operations be carefully scrutinized.” ( via the New York Post )

We cannot confirm whether the transfer offer is indeed a routine business decision or a move designed to keep American pressure off Microsoft’s China operations. However, with the emails coming so soon after the White House’s recent moves to up the ante in the Sino-American chip war, we cannot help but feel that Microsoft is taking steps to slowly move away from China and avoid U.S. sanctions.