As of Sunday, February 11, 141 businesses had made staff reductions this year, according to Layoffs.fyi, a website that tracks joblessness in the IT industry. These businesses include Snap, Microsoft, eBay, and PayPal.
The tech companies are making layoffs because they’ve determined that they have a lot of dead wood after reviewing their staffing levels. And we could accomplish more if we were a lighter organization, Brent Thill, an analyst at Jefferies, told the Financial Times (FT) on Sunday.
“The layoffs are going to continue and it may get worse. It’s become contagious,” Thill added.
As per Daniel Keum, an associate professor of management at Columbia Business School, IT businesses have been assessing which divisions they want to prioritize investments in and making staff cuts in areas that are expensive but not essential, as reported by the Financial Times.
One illustration of this is the hundreds of positions that Amazon’s Twitch video streaming business terminated this year. Keum continued, saying that businesses had been “actively hiring” in addition to the job losses this year.
After laying off more than 20,000 workers at the end of 2022, Meta announced that it will be employing “minimally” this year but will be making “significant investments” in generative AI, which would involve onboarding new employees.
Not just the tech industry has seen job losses this year. AI has been involved in recent large layoffs at businesses like UPS and BlackRock, as PYMNTS reported last week.
“However, many companies are hesitant to directly link technology with job cuts, instead focusing on the positive aspects of AI implementation,” that report said.
For example, UPS has stated that AI is not replacing labor, even though the business acknowledged that technology like AI contributed to their job reductions, which were the largest in its history. Instead, salespeople can build proposals with the assistance of machine learning, which eliminates the need for price expertise.
“Estimating the true impact of AI on job cuts is challenging,” PYMNTS wrote. “According to outplacement firm Challenger, Gray & Christmas, U.S. companies have announced over 4,600 job cuts since May, either to free up resources for hiring individuals with AI expertise or because AI technology replaced certain tasks. “
However, it is believed that this estimate understates the true number of job losses. According to Senior Vice President Andrew Challenger, many businesses would rather not make these layoffs public because doing so frequently attracts unfavorable media attention.