This year, technology firms have eliminated 34,000 positions as part of restructuring their teams to focus on emerging sectors like generative artificial intelligence, which they see as crucial for their future expansion.
According to the website Layoffs.fyi, which monitors job reductions in the sector, companies including Microsoft, Snap, eBay, and PayPal have cut hundreds to thousands of jobs since January’s beginning. In total, 138 tech companies have reduced their workforce this year.
The recent job cuts are less severe than those at the beginning of 2023 when major technology corporations like Meta, Amazon, and Microsoft reduced their workforce. This followed a phase of excessive spending throughout the pandemic. According to Layoffs.fyi, the tech industry saw a total of 263,000 job eliminations in 2023.
Tech companies are reallocating their resources into adapting emerging generative AI technologies and this means more automation and a reduced need for labor, according to industry analysts. This reallocation, they note, not only underscores a commitment to pioneering new fields but also signals to investors a sustained emphasis on fiscal prudence.
Jefferies analyst Brent Thill says that companies have evaluated their workforce and come to the conclusion that: “we’ve got a bunch of dead wood. And if we had a leaner organization we can do more. The layoffs are going to continue and it may get worse. It’s become contagious.”
Daniel Keum, an associate professor of management at Columbia Business School, pointed out that firms are reevaluating their investment focus and eliminating roles in expensive, non-essential departments. He cited the example of Amazon’s Twitch video streaming service, which has seen significant job cuts this year.
Companies like Amazon, Microsoft, Meta, Alphabet (Google’s parent company), and Spotify have all indicated their intention to achieve a balance between strategic investment and cost-efficiency this year.
Spotify chief executive Daniel Ek said earlier this month: “We need to become more efficient by deprioritizing some of the existing things, but we also need to invest in some of the new.”
Google has also recently announced that despite thousands of layoffs within a month, employees should expect more to come in the future.
Via: Financial Times