As technology companies prioritize investments in artificial intelligence and embark on a recruitment drive, other sectors are expected to witness ongoing layoffs until 2024, as per industry analysts.
Over 20,000 tech workers have already been displaced in 2024, as reported by layoff trackers.
According to Dan Ives, managing director at Wedbush Securities, “Google and other major players in the tech industry are heavily investing in AI while simultaneously downsizing in non-core areas. The trend of layoffs in certain segments of Big Tech is set to persist, while the hiring spree in AI is projected to reach unprecedented levels as the competition intensifies within the tech sphere.”
Google’s CEO Sundar Pichai recently cautioned employees about further job reductions this year as the company shifts its focus towards AI investments.
In a memo to employees on January 17, Pichai emphasized, “We have ambitious objectives and will be prioritizing significant investments this year.” He also mentioned the forthcoming disclosure of Google’s AI goals and strategies for 2024, stating, “To facilitate these investments, we must make difficult decisions.”
Earlier this month, Google executed substantial job cuts in its pursuit of operational efficiency and concentration on its “primary product objectives.” This move was partly in response to Microsoft’s integration of ChatGPT into Bing search, prompting Google to enhance its search engine with AI functionalities.
Alex Kantrowitz, founder of Big Technology, highlighted the shift in Google’s cost-saving strategies, stating, “We’re no longer operating in a zero interest rate environment. There is a pressing need to reduce expenses to fuel investments in AI. Training and deploying AI entail significant costs, and that’s the current scenario at Google.”
Kantrowitz further predicted, “I anticipate that other major tech corporations will follow suit.”
SAP, a German enterprise software company, unveiled plans to restructure approximately 8,000 roles to bolster its emphasis on critical growth areas, particularly in business AI, throughout 2024.
Amazon, known for its aggressive AI investments, recently laid off numerous employees within its video-streaming, studio, Twitch livestreaming, and Audible audiobook divisions. This strategic move aimed to reallocate resources to areas with higher impact potential, as affirmed by Mike Hopkins, responsible for Prime Video and MGM Studios.
Additionally, Amazon Web Services disclosed intentions to invest 2.26 trillion yen ($15.24 billion) in Japan by 2027 to enhance its cloud computing infrastructure crucial for AI services.
The wave of job reductions extends beyond the tech sector, with companies like Vroom and Duolingo also streamlining their workforce to pivot towards AI-centric operations.
The downsizing trend observed in recent years, triggered by macroeconomic challenges like high interest rates and inflation, has compelled businesses to reassess their priorities and reallocate resources strategically.
