Workforce reductions are mounting across the tech sector globally as firms attempt to free up more resources for their artificial intelligence (AI) deployments.
According to tracking website Layoffs.fyi, tech companies laid off more than 165,000 people in 2022 and 264,000 people in 2023, with the latest data showing that 410 tech firms have laid off more than 132,900 employees in 2024 so far.
In a separate analysis of more than 700 layoff announcements from the technology sector, tracked by IT jobs portal trueup.io, BestBrokers estimated the number to be much higher, with a total of 203,946 employees being laid off across more than 165 tech companies worldwide since the start of the year.
Many tech firms have explicitly linked the layoffs taking place to the proliferation of AI and machine learning throughout their businesses.
This includes Cisco, which is cutting 7% of its workforce while investing $1bn in AI-related startups; Dell, which is cutting sales roles to reallocate resources to its AI teams; Meta, which, according to CEO Mark Zuckerberg, is laying off employees “so we can invest in these long-term, ambitious visions around AI”; Amazon, which is cutting several hundred positions to focus “resources and efforts focused on generative AI”; and Intuit, which is cutting 1,800 staff to free up more resources for integrating AI into its software offerings.
IBM CEO Arvind Krishna has also previously said the company wouldn’t be hiring while it shifted to AI, while chairman of Indian conglomerate Reliance Industries Mukesh Ambani, which cut 42,000 jobs in the last financial year, described “AI as an enabler for achieving a quantum jump in productivity and efficiency”.
“The economic environment is still tight,” Layoffs.fyi creator Roger Lee told Bloomberg Technology. “Companies are finding that the only way to increase investment in AI is to cut cost elsewhere and hence all the layoffs that we’ve been seeing.”
While other tech firms have also been busy streamlining operations, many have not explicitly mentioned AI as a driving factor, including the likes of Alphabet, Microsoft, Salesforce, Sonos and others. However, there are still indications that the sector’s pivot to AI has had an impact.
For example, in a memo sent to employees in January 2024, Google CEO Sundar Pichai said the tech giant would “remove layers” of its workforce this year to free up funds for “investing in… [the company’s] big priorities… The reality is that to create the capacity for this investment, we have to make tough choices”.
While Pichai did not explicitly mention AI in the memo, it came after the company committed to investing $2bn in generative AI firm Anthropic in October 2023, and a month after it launched its Gemini AI model in December.
In another leaked memo released in the wake of layoffs in its Azure cloud and mixed reality departments, Microsoft’s executive vice-president of strategic missions and technologies, Jason Zander, wrote: “Our clear focus as a company is to define the AI wave and empower all our customers to succeed in the adoption of this transformative technology. It’s never easy to make these tough decisions, particularly when they affect our colleagues and friends.”
Tech firms, in particular, are heavily investing in AI, frequently at the expense of human jobs. Other factors contributing to the ongoing wave of tech layoffs include economic slowdowns, rising inflation, declining stock prices, slowing sales and concerns about a potential recession BestBrokers
According to BestBrokers, the layoffs are due to a mixture of over-hiring during the Covid-19 pandemic, the effects of rising interest rates on businesses, and the proliferation of AI and automation prompting companies to restructure and downsize their teams accordingly.
“Tech firms, in particular, are heavily investing in AI, frequently at the expense of human jobs,” it said. “Other factors contributing to the ongoing wave of tech layoffs include economic slowdowns, rising inflation, declining stock prices, slowing sales and concerns about a potential recession.”
Writing primarily about US companies, Scott Galloway, a marketing professor at New York University’s Stern School of Business, said while the tech sector’s previous layoffs in 2022 could be reasonably explained by pandemic over-hiring, this explanation holds much less weight 18 months on, especially when business results are good across the board.
“It’s not just tech. While the broader economy is enjoying steady job growth and low unemployment (the longest period of sub-4% unemployment in 50 years), many firms have let large numbers of employees go – UPS, CVS and Hasbro are among the companies that have announced layoffs of 1,000+ people in the past six months,” he wrote on his blog.
“What’s really going on? I believe AI is playing a larger role in layoffs than CEOs are willing to admit… But as a general rule, expect a CEO to be reluctant to state on an earnings call that the fastest-growing technology in history is already giving her ‘the ability to lay off people without any impact on the top line’.”
He added that CEOs are currently “being coy about this, at least in public” because of fears surrounding the proliferation of AI: “The illusionist’s trick in the Valley right now is getting the media to look over there (trimming fat) while they’re stuffing the rabbit into the hat here (replacing it with AI).
“In the next several quarters, however, I believe CEOs will come out in earnings calls and put it bluntly: ‘We’re going to be a smaller company that does more business thanks to AI.’ Pundits will clutch their pearls for a hot minute until the stock explodes, and the secret hiding in plain sight will be visible to everyone. It’s corporate Ozempic.”
However, Galloway noted that while job losses are part of the story, the broader picture revolves around job augmentation: “Rather than copywriter Mary losing her job, Mary’s firm will train her on an AI tool that generates first drafts, takes approved product copy and converts it for catalog, web and social use, and streamlines other tasks. Accordingly, Mary’s manager will expect her to generate three times the copy in the same time.”
He concluded this means “managers can take on new initiatives and domains without the headache of hiring more humans”, which will… This will, correctly, raise concerns about a dystopia where nobody can find work. But AI will ultimately create jobs, as there will be new windows of attack against corporate titans.”