AI and cost cutting biggest reasons why tech layoffs have surged by 136 per cent
According to a survey published by US firm Challenger Gray, the emergence of artificial intelligence (AI) is posing a significant threat to white-collar jobs.
The tech sector has witnessed over 32,000 employee layoffs so far. What's the reason? The same factors that made 2023 a difficult and uncertain year for job security. And at play were the factors including mismanaged recruitments, struggles with ad revenue, and a faltering economy that forces companies to cut costs, often through layoffs.
However, while companies blame the recession for hindering growth, there's another major factor: the introduction of artificial intelligence (AI) and machine learning (ML) models. More than the economic slowdown, AI transformation became the driving force behind job cuts last year and continues to be a significant factor this year.
According to a survey published by US firm Challenger Gray, the emergence of artificial intelligence (AI) is posing a significant threat to white-collar jobs. Employees in various fields, including programmers, company management, lawyers, accountants, finance and insurance professionals, consultants, and others, are facing the risk of job displacement due to automation.
In January, the main cause of job losses was cited to be "restructuring", with 28,329 layoffs, followed by 14,555 cuts due to "closing" of plants, stores and units. However, artificial intelligence was blamed for 381 layoffs alone in January. Challenger recorded that around 4,628 layoffs are attributed to Artificial Intelligence since May 2023, when it started tracking this reason. The companies either shifted to developing AI and hiring in the related roles or replaced some tasks and roles with it.
"The impact of rapidly advancing artificial intelligence adoption is beginning to be felt from a jobs perspective, particularly in Media and Tech, but truly across sectors. That said, companies are not outright blaming AI for many layoff decisions," said Challenger.
Interestingly, while AI is being blamed for job cuts, the growing sector of AI and Machine learning is also causing companies to increase hiring in related fields. According to CompTIA's report, the demand for AI and machine learning skills is soaring among the companies. In the related field, there were 33,727 job openings in January alone, which is the highest monthly growth in a year.
