Microsoft Corp.’s second round of mega-layoffs in recent months — this time, 9,000 jobs, or 4% of its workforce — is likely to become an industry norm as artificial intelligence (AI) spending and adoption soars.
The tech giant, which announced the cuts Wednesday as it racks up record-breaking profits, already shed more than 6,000 jobs in May and eliminated less than 1% of its workforce based on performance evaluations in January. Not coincidentally, the aggressive staff reductions come as Microsoft and other Big Tech players lavishly spend on AI initiatives; the software giant is spending billions of dollars to lease and build data centers essential to meet demand for cloud computing and AI.
It is the latest sign that Microsoft’s AI development is probably having a debilitating impact on the size of its workforce. For example, GitHub Copilot, the company’s AI product for coding and software development, has more than 15 million users.
What is more troubling for the rank and file, however, is that high-tech executives have made no secret of their ambitions to replace many workers with AI. Microsoft Chief Financial Officer Amy Hood told investors in April that the company is trying to trim bureaucracy and was “increasing our agility by reducing layers with fewer managers.”
Meanwhile, Amazon.com Inc. CEO Andy Jassy, whose company has slashed more than 27,000 jobs the past few years, told employees last month that he expected its ranks to shrink the next few years “as we get efficiency gains from using AI extensively across the company.”
Jassy said the adoption of generative AI in particular will mean “fewer people” and in a recent internal memo, he wrote, “We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs. It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”
He added that AI will create new jobs in robotics, AI development, and other fields requiring human creativity and complex decision-making.
Amazon’s ongoing cuts signal a bleak outlook for everyday tech workers, particularly those not steeply skilled in AI or whose jobs can be replaced by what the CEOs of NVIDIA Corp. and Salesforce Inc. have heralded as digital workers in the form of AI agents capable of performing low-level, repetitive tasks.
Indeed, the tech industry — already bloated by a COVID-era hiring binge — is enduring a wave of layoffs that have left thousands out of work at Microsoft, Amazon, Cisco Systems Inc., Autodesk Inc., CrowdStrike Holdings Inc., and elsewhere looking for their next gig.
The U.S. private sector lost 33,000 jobs in June, suggesting tech’s cost-cutting measures are contributing to broader economic uncertainty. Economists had predicted a gain of about 100,000 jobs.
Ironically, while most tech workers fret over their future in the dawning age of AI, an elite group of top researchers in the field are being pursued like high-priced free agents with staggering pay packages. Meta Platforms Inc., for example, is dangling $100 million job offers to poach top talent from the likes of OpenAI. It and Apple Inc., at the same time, are exploring acquisitions of startups like Perplexity AI to pick up talent as much as products.
