It is January 18, 2024, just a little more than two weeks into the new year, and so far Tech businesses have laid off at least 7,785 employees at 58 companies, according to the tracking website Layoffs.fyi. While the number of layoffs per company appears to be moderating some as compared to last year’s crazy post-COVID downward adjustment frenzy, the stream of companies laying off staff appears unrelenting.
See more on 2024 Tech layoffs
STRATA-SMART SYNOPSYS – In 2024, the tech industry experiences a resurgence of layoffs, with over 7,785 job cuts at 58 companies within two weeks. Unlike the pandemic-driven layoffs of 2023, companies now prioritize building AI capabilities, leading to layoffs in various divisions. Google and Amazon announce layoffs, attributing the shift to the AI revolution. Analysts anticipate a more modest overall job cut compared to the previous year, as companies simultaneously hire for their AI divisions, highlighting the challenge of finding AI expertise. The industry faces uncertainty as the impact of these layoffs on other technology segments remains to be seen.
The year 2023, according to Meta (Facebook) CEO Mark Zuckerberg, was the year of efficiency. And by that, he apparently meant a year of efficiently shedding all of the workers the company had added as a result of a hiring binge as companies tried to scale up to handle the activity uptick during the pandemic.
Apparently, many companies were on the same page as Zuckerberg, as the tech industry was the leading economic sector in terms of layoffs. With more than 260,000 job cuts last year, companies had to get as efficient at firing last year as they were at hiring in 2021/2022.
It’s a New Year, But an Old Problem
Now, it’s a new year but the same old problem. This time, however, the layoffs are mostly not due to the pandemic, but rather due to many companies shifting their business priorities from existing divisions and businesses to building their AI (artificial intelligence) capabilities.
Just last week, Alphabet/Google said it will lay off around a thousand employees across multiple divisions, including its voice assistant unit and the teams responsible for Pixel and Fitbit. In fact, even its advertising unit – normally protected from layoffs as its largest revenue-generating division, has said it will be laying off hundreds of workers.
Amazon has also laid off hundreds of workers in its streaming and studio operations last week. Beyond that, it also cut 500 jobs at its Twitch live streaming platform and another hundred or so positions at its Audible audiobook business.
An analysis by Reuters points the finger at companies shifting resources to their AI initiatives. They spoke to an analyst who told them:
No company want to get left behind by the AI revolution and they are all making sure they have these capabilities and are prioritizing them, even when it is at the expense of other initiatives.Gil Luria, a D.A. Davidson & Co. analyst
Companies Shifting Resources to AI Units
Most experts expect the total number of Tech job cuts this year to be more modest overall as compared with 2023. For example, last year Google cut more than 12,000 jobs. And while it is still early this year, a 1,000-person headcount reduction seems quite modest in comparison.
As one analyst told Reuters, many of these same companies who are cutting jobs in various business units this year, are at the same time hiring for their AI divisions. The problem is that expertise in AI is hard to find – otherwise, the hiring numbers would be higher and help to minimize the overall job loss numbers.
Will these Big Tech layoffs start a trend that affects other segments of technology? That remains to be seen. As I’ve reported elsewhere, there are indications of waning consumer demand for technology overall. But more recent reports tend to suggest that the downward trend is moderating somewhat.