Since the beginning of the year, 34,000 jobs have disappeared at tech companies. They want to adjust their workforce to invest in new areas, particularly generative AI.
That’s according to figures from Layoffs.fyi. A total of 138 tech companies have already laid off staff this year. Microsoft, Snap, eBay and PayPal, among others, have cut hundreds or thousands of jobs. At the beginning of each year, tech companies often evaluate their workforce. Similarly, there were hefty rounds of layoffs in early 2023, with more than 80,000 jobs disappearing in a month in the tech industry. At the time, the layoffs were a response to overinvestment in personnel during the pandemic.
According to analysts Financial Times spoke to, tech companies are now reallocating their resources. This should give them new resources to invest in generative AI. It should also signal to shareholders that tech companies continue to focus on cost discipline.
Concerns in industry
After evaluating the workforce, the companies conclude that there are redundant jobs. “If we had a leaner organisation we can do more,” Jefferies analyst Brent Thill interpreted the thinking. “The layoffs are going to continue and it may get worse. It’s become contagious.”
Autumn Mitchell, a quality assurance tester at gaming company ZeniMax, confirms this trend. “Anybody working in tech or games right now is worried about lay-offs to some degree, either for themselves or someone they know. You see one company announce lay-offs and think ‘Here we go, who’s it going to be next week?'”
For example, Germany’s SAP recently announced a restructuring this year that will affect 8,000 jobs. The ERP vendor said it needed to change its operational setup to capitalize on key strategic growth areas. AI, in particular, offers growth opportunities for SAP.
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