Major technology companies, including SAP, Google, Microsoft, and Duolingo, have been investing heavily in artificial intelligence (AI), sparking a debate on whether these initiatives are behind the mass layoffs the tech industry saw in 2023, and is still seeing in 2024.
Layoffs.fyi reported in 2023 that layoffs in the tech industry exceeded 250,000, which is over 50% higher than layoffs in 2022. In 2024, tech layoffs continue to happen, with data from the site showing that 104 tech companies have laid off over 28,000 workers so far.
Overall, the tech industry has seen 456,534 layoffs from 2022 till date. Recent announcements of job cuts from eBay, Google and Microsoft’s Gaming division have raised questions about the evolving relationship between AI integration and employment in the tech sector.
SAP, a German software giant, also recently disclosed plans to invest over $2 billion in integrating AI into its operations as part of a “transformation program.” Simultaneously, the company announced a restructuring that will affect 8,000 roles. While some employees will be laid off, others are expected to undergo retraining to collaborate with AI. SAP aims to maintain a similar workforce size by the end of the year.
Duolingo, a language learning platform, has also acknowledged a 10% reduction in its contractor workforce, maintaining that increased AI usage was not the reason for the job cuts. However, the recent spate of tech layoffs raises concerns among employees who were promised that AI advancements would eliminate routine tasks, allowing for more creative and productive work.
There’s a good reason for tech employees to be concerned. If 2024’s incoming months maintain the rate of workers laid off in January, the number of employees who lose their jobs in 2024 could surpass that of 2023.
What are the Experts Saying?
According to CSBS News, experts following the situation have cautioned against directly linking AI investments to job losses. Oded Netzer, a business professor at Columbia University, argues that companies are merely altering investments based on growth areas of their business due to 2023 being a generative year for AI. Netzer stressed that while AI might lead to a reduction in certain roles, it would also create new opportunities in AI-related positions.
There’s also the belief that AI hasn’t evolved enough to completely replace human workers, a view Cory Stahle, an economist at the Indeed Hiring Lab, shares. Stahle suggests instead that layoffs could be linked to companies adjusting their workforces after engaging in significant hiring sprees during the pandemic, to keep up with the increased usage of tech products.
With consumers back out and about after the lockdowns, there’s less consumption of tech products, forcing companies to reduce their workforce to save costs. Stahle believes that if AI was the cause for the layoffs, the numbers would be even larger than they currently are.
Looking forward
While no empirical evidence suggests that AI plays a major role in the layoffs, it is evident that AI has come to stay. It’s advisable that workers learn to work hand in hand with the technology to avoid being replaced if such a trend starts in future.
By Derrick Kafui Deti – Digital Economy Magazine
