Tech layoffs have been stacking up since the beginning of the year, and experts suggest it might be the new normal for Silicon Valley as the focus shifts towards artificial intelligence.
The scale of these job cuts doesn't match the massive layoffs seen in late 2022 and early 2023 when tech
Companies shed hundreds of thousands of jobs, a reaction to the hiring spree during the pandemic's shift to online living.
Facebook-owner Meta called it the "year of efficiency," and it worked, with most major tech stocks now performing well as they head into an expectedly strong quarterly earnings week.
According to Wedbush analysts like Dan Ives, the significant layoffs are mostly behind us. However, a new trend is emerging where big tech companies are reallocating resources, emphasizing investment and commitment to AI while scaling back on non-strategic initiatives.
As we await results from Microsoft, Meta, Google, and Amazon in the coming days, analysts are closely watching the impact on AI initiatives.
In 2023, the tech industry lost 260,000 jobs, but in just the first four weeks of this year, there have been 24,584 layoffs from 93 companies, as reported by layoffs. fyi, a California-based website tracking the sector.
Notably absent from the list of layoffs is Apple, which has largely avoided the post-pandemic workforce reduction wave.
Google CEO Sundar Pichai alerted employees on January 18 about upcoming layoffs as the company shifts its focus to new priorities, including artificial intelligence. Pichai emphasized the need for tough decisions to create capacity for these investments.
While Google has recently let go of staff in various divisions, the scale is smaller compared to last year's 12,000 job cuts.
Similarly, Amazon continues to implement job cuts announced last year, especially in its entertainment and streaming division. Microsoft is also downsizing, letting go of nearly 2,000 workers from its gaming division following the acquisition of Activision Blizzard.
Other companies, including eBay, Salesforce, Duolingo, and several startups, have also reduced staff, constrained by a high-interest rate environment limiting their access to financing.
Roger Lee, the creator of layoffs.fyi, attributes these layoffs to the aftermath of over-hiring during lockdowns and a copycat effect where companies follow suit to gain approval from Wall Street or venture capitalists.
According to Layoffs.fyi estimates, around 20% of job losses are linked to AI and restructuring associated with it. Silicon Valley jobs are particularly affected, with some coding tasks now performed by generative AI.
John Blevins, a guest lecturer at Cornell's SC Johnson College of Business, notes that the increasing use of AI to enhance business operations is a trend affecting every industry globally, with the tech sector leading the way in adapting to this transformative technology.