The technology sector is experiencing job cuts around the world as companies seek to free up more resources to use artificial intelligence (AI).
According to tracking website Layoffs.fyi, tech companies laid off more than 165,000 employees in 2022 and 264,000 in 2023. The latest data shows that 410 tech companies have laid off more than 132,900 employees so far in 2024.
In a separate analysis of more than 700 layoff announcements from the technology sector tracked by IT job portal trueup.io, BestBrokers estimated the number to be much higher, with a total of 203,946 employees laid off at more than 165 technology companies worldwide since the beginning of the year.
Many technology companies have explicitly linked the layoffs taking place to the proliferation of AI and machine learning in their companies.
These include Cisco, which is cutting 7% of its workforce while investing $1 billion in AI-related startups; Dell, which is cutting sales positions to allocate resources to its AI teams; Meta, which CEO Mark Zuckerberg says is laying off employees “so we can invest in these long-term, ambitious visions around AI”; Amazon, which is cutting several hundred jobs to “focus resources and efforts on generative AI”; and Intuit, which is cutting 1,800 jobs to free up more resources to integrate AI into its software offerings.
IBM CEO Arvind Krishna had also previously stated that the company would not hire new employees during the transition to AI. Chairman of Indian conglomerate Reliance Industries Mukesh Ambani, which cut 42,000 jobs in the last fiscal year, described AI as an “opportunity to achieve a quantum leap in productivity and efficiency.”
“The economic environment is still tight,” Roger Lee, founder of Layoffs.fyi, told Bloomberg Technology. “Companies are realizing that the only way to increase investment in AI is to cut costs elsewhere. That’s where all the layoffs we’re seeing are coming from.”
Other technology companies are also busy streamlining their operations, but many of them have not explicitly cited AI as a driver, including Alphabet, Microsoft, Salesforce, Sonos and others. But there are signs that the sector’s turn to AI has had an impact.
For example, Google CEO Sundar Pichai said in a memo to employees in January 2024 that the tech giant would cut “layers” of its workforce this year to free up funds for “investments in … the company’s big priorities … The reality is that we have to make difficult decisions to create the capacity for these investments.”
Although Pichai did not explicitly mention AI in his memo, it came after the company committed to investing $2 billion in generative AI company Anthropic in October 2023 and a month after it launched its AI model Gemini in December.
In another leaked memo released in the wake of the layoffs in the Azure cloud and mixed reality divisions, Jason Zander, executive vice president of strategic missions and technologies at Microsoft, wrote: “Our clear focus as a company is to define the AI wave and enable all of our customers to successfully adopt this transformative technology. Making these difficult decisions is never easy, especially when they affect our colleagues and friends.”
Technology companies in particular are investing heavily in AI, often at the expense of human jobs. Other factors contributing to the ongoing wave of layoffs in the technology industry include economic slowdowns, rising inflation, falling stock prices, declining sales and concerns about a possible recession.
BestBrokers
According to BestBrokers, the layoffs are due to a mix of over-hiring during the Covid-19 pandemic, the impact of rising interest rates on businesses, and the proliferation of AI and automation, which is causing companies to restructure and downsize their teams accordingly.
“Technology companies in particular are investing heavily in AI, often at the expense of human jobs,” it says. “Other factors contributing to the ongoing wave of layoffs in the technology sector include economic slowdowns, rising inflation, falling stock prices, declining sales and concerns about a possible recession.”
Scott Galloway, a professor of marketing at New York University’s Stern School of Business who writes primarily about U.S. companies, says that while the wave of tech layoffs in 2022 could certainly be explained by pandemic-related overstaffing, 18 months later, that explanation is far less compelling, especially given overall strong business results.
“It’s not just about technology. While the economy as a whole is enjoying steady job growth and low unemployment (the longest period of unemployment below 4% in 50 years), many companies have laid off large numbers of employees – UPS, CVS and Hasbro are among the companies that have announced layoffs of over 1,000 employees in the last six months,” he wrote on his blog.
“What’s really going on? I think AI plays a bigger role in layoffs than CEOs are willing to admit… But generally speaking, you should assume that a CEO on a quarterly earnings call would be reluctant to explain that the fastest-growing technology in history already gives him ‘the ability to lay people off without impacting revenue.'”
He added that CEOs are currently “at least publicly reluctant” because they fear the spread of AI: “The trick of the illusionists in the Valley right now is to get the media to There (cut fat) while stuffing the rabbit into the hat Here (and replace with AI).
“However, I believe that in the next few quarters, CEOs will bluntly say on earnings calls, ‘We’re going to be a smaller company that makes more revenue thanks to AI.’ The pundits will clutch their pearls for a hot minute until the stock explodes and the secret that’s been hiding in plain sight becomes visible to all. That’s the Ozempic Principle of companies.”
However, Galloway noted that while it’s about job cuts, the bigger picture is about job expansion: “Instead of copywriter Mary losing her job, Mary’s company will train her on an AI tool that creates first drafts, takes approved product copy and converts it for catalogs, web, social media, and streamlines other tasks. Accordingly, Mary’s manager will expect her to produce three times as much copy in the same amount of time.”
He concluded that this means “managers can take on new initiatives and areas without having to worry about hiring more people,” which “… will rightly raise fears of a dystopia where no one can find work. But AI will ultimately create jobs because there will be new windows of attack against corporate giants.”
