Tech companies have already laid off 34,000 employees in 2024 due to AI development

Technology companies have already laid off 34,000 employees since the beginning of this year due to the to focus on the development of artificial intelligence. The Financial Times writes about the wave of layoffs in the global tech industry.

Microsoft, Snap, eBay, and PayPal have cut hundreds or thousands of job positions since the beginning of January, according to Layoffs.fyi, an analytics platform that tracks employee turnover in the industry. Overall, 138 tech companies have laid off staff this year.

These losses are lower than in early 2023. Throughout last year, 263,000 jobs were cut in the tech sector. However, a number of companies, including Amazon, Microsoft, Meta, Google, and Spotify, have announced their plans for optimization this year.

Why does it happen?

Analysts comment that the latest wave of layoffs indicates that companies are reallocating their resources to invest in new areas, such as generative AI, and demonstrate to shareholders that they continue to adhere to cost discipline.

Last year, massive cost-cutting in tech companies occurred in tech companies after they realized that the transition to a digital lifestyle did not last longer than COVID-19. During the pandemic, these companies would actively hire employees, expecting that the change in people’s behavior would be permanent.

However, when life began returning to its previous form, it turned out that there was no longer any need for such large teams. Therefore, they had to cut costs in different ways, in particular by reducing staff numbers.

This year’s layoffs seem to be more strategic than seasonal, said Daniel Kim, associate professor of management at Columbia Business School. “In 2022 and 2023, there was “downsizing” of the staff after the pandemic, i.e., the reduction of jobs that were considered redundant. But this year’s cuts are happening simultaneously with “active hiring” in new areas.

This trend has not bypassed Ukraine either. Recently, Grammarly, a platform for improving written English, announced the layoffs of about 230 team members worldwide, with 37 being from Ukraine.