As corporate dollars shift toward AI, technology workers may be left out of luck.
Something unique is happening on the corporate labor front, with almost 24,000 technology pink slips issued so far in 2024.
It’s not exactly a new phenomenon. 2023 saw 262,000 tech workers laid off, compared to 165,000 in 2022. Amazon, at 27,000 workers, laid off the most employees. Meta, at 21,000 layoffs, and Google, at 12,000 job cuts, weren’t too far behind.
While a softening economy and reduced profits account for many tech industry jobs layoffs, another longer-term factor looms large on the labor horizon – artificial intelligence.
“Google and the rest of Big Tech are betting big on AI while cutting back on non-strategic areas,” said Dan Ives, managing director at Wedbush Securities, in comments to CNBC this week. “Layoffs will continue to happen for Big Tech in some areas while the hiring frenzy in AI will be unprecedented as this arms race continues across the tech world.”
Google has made that concept clear.
Last week, company CEO Sundar Pichai told employees that AI is here to stay and that the technology would likely impact jobs on the downside.
“We have ambitious goals and will be investing in our big priorities this year,” Pichai noted in a Jan. 17 memo to employees. 2024 is already scheduled to be a big year for AI implementation at the tech giant, leaving other company areas vulnerable to layoffs. “The reality is that to create the capacity for this investment, we have to make tough choices,” he wrote.
A Threat to a “Lot of Jobs”
Klarna, the Sweden-based “buy now, pay later” digital financing company, is also counting on AI to reduce labor costs.
In an interview last week with the U.K.-based Telegraph, company CEO Sebastian Siemiatkowski said the company’s current hiring freeze is in place because management believes AI can handle the jobs just as efficiently, and at a much lower cost.
“Things that previously took people a lot of time can be done much faster and much shorter, and we need fewer people to do the same thing. The right thing for us is just to say: ‘Let’s not recruit now, let’s see how this plays out,” he said.
Calling AI “a threat to a lot of jobs,” Siemiatkowski said “There will be a shrinking of the company,” Siemiatkowski cited the rise of game-changing AI technologies like ChatGPT, which Klarna is already using as a de facto, customer-facing personal digital assistant. “We’re not currently hiring at all, apart from engineers.”
Then there’s Germany-based software company SAP, which says it’s planning to restructure 8,000 workers, with many of those jobs being replaced by AI. The company is pouring $2 billion into what it calls a “transformation project”.
The reality on the ground now across the technology industry is that the more cash flowing into AI in company budgets, the more layoffs are likely.
“I would counsel folks to watch what the firms do, and if they are saying the presence of large language models is allowing them to lay people off, that has to be taken into account,” said Mark Muro, a senior fellow at the Brookings Institution who tracks technology companies. “There is no doubt forthcoming work is going to show that coding and many engineering-type occupations have very high exposure levels [to AI].”
“So we should take them at face value on this,” he told CBS News this week.
Brian O’Connell, a former Wall Street bond trader and best-selling author, is a prominent figure in the finance industry. With a substantial background as an ex-Wall Street trader, he has authored two best-selling books: ‘The 401k Millionaire’ and ‘CNBC’s Creating Wealth’, demonstrating his profound knowledge of finance and investing.
Brian is also a finance and business writer for esteemed national platforms and publications, including CNN, TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.
