Oracle has cut 21,000 jobs worldwide over the past twelve months, according to the tech giant’s annual report. Oracle cites the use of AI in its business processes as the direct cause of the downsizing. In addition to the loss of personnel, this strategic decision had significant financial consequences. Restructuring costs rose to $1.8 billion, more than five times the amount from the previous year.
As of May 31, Oracle had approximately 141,000 full-time employees, compared to about 162,000 a year earlier. The reduction amounts to about 13 percent of the workforce. The company states in its annual report that the use of AI has resulted in—and will continue to result in—a reduction in headcount.
A Costly Bet on AI
It is clear that the job losses have an AI dimension. Nevertheless, the goal appears to be more about freeing up funds for the expansion of AI infrastructure than about AI taking over all the work of countless Oracle employees. We previously reported that investment bank TD Cowen had forecast a round of layoffs affecting approximately 30,000 employees. By February, Oracle had already accumulated $58 billion in debt. The actual downsizing fell slightly short of that figure, but the direction was already clear.
To finance those AI ambitions, Oracle announced earlier this year that it intended to raise at least $50 billion for additional data center capacity. Clients such as OpenAI and Meta need this for their AI workloads, from training to inference. Meanwhile, Nvidia, computer memory manufacturers, and energy companies are benefiting the most from this massive expansion.
A Broader Trend in the Tech Sector
Oracle, incidentally, is far from the only company cutting (tens of) thousands of jobs. Over the past twelve months, more than 100,000 tech workers worldwide have lost their jobs, according to estimates by labor market researchers. Amazon has announced a downsizing similar to Oracle’s, where 30,000 jobs were cut, while simultaneously pumping $200 billion into AI investments.
Oracle itself acknowledges the risks of the reorganization. The company warns that the restructuring could lead to a shortage of qualified personnel in certain roles. It told the BBC that it will continue to evaluate how to allocate its resources to deliver the best cloud and AI products.