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Are the Current Tech Layoffs Caused by AI? AI's Role in U.S. Job Cuts

For those in the technology sector, the beginning of 2024 has delivered a large helping of deja vu. January 2024 has seen a repeat of the previous year’s wave of tech job cuts and layoffs. Tech giants like Google, Meta, Microsoft, and Amazon have all set their sights on “restructuring”; cutting costs in some departments so they can reallocate funds to other investments or projects. 

The hiring freezes and widespread, seemingly sudden layoffs are leaving many tech professionals with feelings of disillusionment, fear, and cynicism, and have contributed to an overall pessimistic impression of the economy among U.S. workers. The cuts have also fueled fears that AI will soon make human roles obsolete. Some companies that have chosen to lay off workers this year, including Google, have stated that their continued focus on AI advancement is a reason for the cuts. 

Do these statements mean AI is responsible for the job cuts? Is AI tech on its way to replacing human roles? Let’s get into the details of the 2023 and 2024 layoffs and the reasons behind them, and delve into predictions for the future of tech companies in an AI-powered world.

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2023 layoffs

2024 layoffs

Are the tech layoffs expected to continue?

Is AI taking over jobs?

Are you looking to use AI tools in your business?

2023 layoffs

January 2023 was a grim time for tech workers, as a significant number of well-known tech companies slashed their workforces, impacting a combined total of nearly 90,000 employees. Out of the five “Big Tech” companies - Amazon, Meta, Google, Microsoft, and Apple - Apple was the only one who didn’t announce layoffs in January of 2023. The most common explanation given by various companies for the layoffs was economic headwinds. The tech industry enjoyed strong growth during the pandemic, and had hired accordingly, but rising inflation going into 2023 made that growth unsustainable.

The most layoffs in a single month were announced in January of 2023, but job cuts continued throughout the year. The total number of tech employees laid off in 2023 came out to nearly 225,000. 

Let’s get into some of the major tech layoffs of 2023 and the reasons behind them.

Alphabet Inc. 2023 layoffs

Alphabet, Inc. Google’s parent company cut about 12,000 jobs in January of 2023, citing economic unrest as the reason. Alphabet CEO Sundar Pichai claimed in an open letter that the company had “hired for a different economic reality” and was being forced to downsize its pandemic-driven growth. 

Microsoft 2023 layoffs

Microsoft announced that 10,000 jobs would be cut in January 2023, but by the end of the year, their workforce had declined by more than 16,000. The reasons for the cuts were increases in operating costs, and a focus on “strategic growth”. 

Amazon 2023 layoffs

Amazon laid off 18,000 employees in January 2023, citing economic uncertainty. Other smaller bouts of layoffs occurred throughout 2023, mostly affecting Amazon Fresh and Whole Foods store workers, as well as roles in Amazon Web Services, advertising, and the live streaming platform Twitch. The total number of Amazon layoffs throughout 2023 came out to over 27,000.

Meta 2023 layoffs

Meta declared 2023 its “year of efficiency” and vowed to cut out middle management roles, a process that was referred to internally as a “flattening”. Meta’s layoffs began before the January 2023 wave, with CEO Mark Zuckerberg making the decision to cut 13% of the company’s workforce in November 2022, eliminating about 11,000 roles. In March 2023, Meta announced that 10,000 more roles were on the chopping block, set to be cut during two rounds of layoffs by the end of May.

In Oct. 2023, Meta stated they were going to prioritize hiring in the new year, focusing on engineers and other technical roles related to AI. The company was the first of the big 5 to declare AI as a top priority for 2024, but this sentiment has become all too familiar since.

2024 layoffs

This year started off feeling nearly as brutal for tech professionals as 2023 did. In the first few weeks of the year, almost 100 tech companies - including Google, Meta, Microsoft, and Salesforce - laid off a collective 25,000 employees.

Though economic uncertainty remains a factor, the priorities of tech companies seem to have changed. Big tech companies are cutting down their teams and abandoning less profitable projects to free up resources to invest in innovative new technologies - mainly AI. The common belief seems to be that the short-term cuts will result in long-term payoff.

Google 2024 layoffs

Google kicked off the 2024 wave of large-scale layoffs by cutting hundreds of jobs across a few departments. The Google job cuts affected employees working on Pixel smartphone hardware, Google Assistant developers, and workers in the company’s core engineering division.

According to the NYTimes, Google has explained the reason for the cuts is that they are “responsibly investing” in their biggest priorities and “significant opportunities ahead”. The company’s reorganization is a way to reduce operating costs in order to focus their resources on artificial intelligence.

After the initial round of layoffs, Google went on to slash several hundred additional roles in their ad sales team. And according to a leaked internal memo from Sundar Pichai shared with all Google employees, more layoffs are to be expected.

The memo, which was leaked to and shared by The Verge, stated that additional job cuts in the near future will be necessary for the company to reach its “ambitious” goals for the year. “The reality is that to create the capacity for this investment, we have to make tough choices,” Pichai said in the memo.

“Tough choices” in this instance, of course, refers to layoffs.

Pichai has specified 7 goals he wants Google to accomplish by the end of 2024. These goals include: 

  • Deliver the world’s most advanced, safe, and responsible Al. 
  • Build the most helpful personal computing platforms and devices. 
  • Improve company velocity, efficiency, and productivity, and deliver durable cost savings.

It seems as though in order for the company to have the funds to achieve their goals, more roles will need to be eliminated and management structure will have to be altered.

Meta's new priorities

After the significant reduction in Meta’s headcount in 2023, Meta is working towards its new priorities with a leaner business model.

CEO Mark Zuckerberg’s latest move was to streamline Meta’s AI research efforts by moving the company’s AI research group, FAIR, into the same part of the company that’s working on generative AI products for Meta’s apps. His ultimate goal, as he stated in a Threads video uploaded in mid-January 2024, is to develop and publicize artificial general intelligence.

“I’m bringing Meta’s two AI research efforts closer together to support our long term goals of building general intelligence, open sourcing it responsibly, and making it available and useful to everyone in all of our daily lives,” Zuckerberg said in his Threads update. AI appears to be top-of-mind for Zuckerberg; he’s envisioning a future where AI is integrated heavily into our daily lives and is able to help us with daily tasks.

Despite last year’s plans to focus on hiring, Meta has laid off a small number of Instagram employees, mostly those in Technical Program Manager (TPM) roles. These layoffs are part of a continued effort to flatten the internal hierarchy and free up more resources to pour into AI.

Microsoft 2024 layoffs

In January 2024, Microsoft made the decision to lay off 1,900 employees at Activision Blizzard and Xbox. This news comes just three months after Microsoft acquired Activision Blizzard in a $68.7 billion deal.

According to Microsoft Gaming CEO Phil Spencer, the layoffs are a part of the process of building a “sustainable cost structure” that will help fuel future growth.

Though the pandemic tech hiring boom is likely still a factor, as well as restructuring due to the acquisition, the layoffs may also signal a change in priorities for Microsoft. The software giant has become increasingly focused on AI development, between the release of Microsoft Copilot and its expanded partnership with OpenAI

Are these cuts expected to continue?

While it may seem like a bleak time to be a tech employee, NYTimes economic analysts believe that the tech sector is due for a rebound. In January 2024, the tech industry saw its second consecutive month of job growth, adding 18,000 workers. The industry currently has an unemployment rate of 3.3%, which is below the national average of 3.7%. Contrary to popular belief, tech job gains are surpassing losses.

One of the most in-demand skills you’ll find in new tech job listings is experience with AI development. AI engineers, semiconductor engineers, and AI software developers have never been more sought after. In fact, according to NYTimes analysts, though Google is planning to conduct more layoffs throughout 2024, they’re looking to hire one type of role: AI engineers.

In summary, it’s a great time to be in AI, but the new roles may come at the expense of other tech jobs.

Besides tech, some businesses in other industries are looking to slim down their number of roles as well in favor of an AI takeover. According to a survey of business leaders by ResumeBuilder, 38% of companies say they are likely to have layoffs in 2024, and 4 in 10 say layoffs are due to replacing workers with AI. So AI can potentially lead to layoffs in two ways: Either AI replaces a role, or jobs in non-AI departments are eliminated to make room in a company’s budget for AI development roles.

Do the tech layoffs mean AI is on its way to replacing jobs?

The cuts are making two things clear: Software engineering jobs that don’t involve AI training and development are very exposed to AI, and business leaders are more convinced than ever that AI is the future.

Though some business leaders are looking to replace a portion of human roles with AI, AI at its current level of sophistication is unable to perform all aspects of the majority of roles better than a human can. The recent layoffs in the tech sector aren’t due to AI replacing jobs, but rather a shift in the priorities held by big tech. The companies that are laying off workers aren’t replacing those jobs with AI, but are instead investing less in some departments to invest more in others.

While most jobs can’t be overtaken by AI currently, it’s clear that businesses are viewing AI as an opportunity to increase efficiency and slim down their workforces. Roles currently exposed to AI may see less demand moving forward as daily tasks become AI-assisted. And workers that don’t keep up with AI tech may find themselves falling behind the curve.

Are you looking to use AI in your business?

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Take our AI ethics quiz to evaluate your current level of regulatory compliance in regards to data processing and AI bias, so you can develop a sustainable AI operations plan for the future.