FOLLOW US

Major technology companies are increasingly linking mass job cuts to advances in artificial intelligence, signaling a shift in how executives frame workforce reductions.

Once, corporate leaders leaned on phrases like “over-hiring,” “efficiency,” or “too many management layers” to explain layoffs. Today, the narrative is dominated by AI.

In recent weeks, Google, Amazon, Meta, and smaller firms including Pinterest and Atlassian have either announced or hinted at workforce reductions, crediting AI developments with enabling their teams to achieve more with fewer employees.

"I think that 2026 is going to be the year that AI starts to dramatically change the way that we work," Meta CEO Mark Zuckerberg said in January.

Since then, Meta—owner of Facebook, Instagram, and WhatsApp—has cut hundreds of jobs, including 700 just last week. A company spokesman said Meta, which plans to nearly double its AI spending this year, continues to hire in “priority areas.”

Two sources at the company told the BBC that further layoffs are likely in the coming months, even as hiring freezes remain in place in several departments.

‘I Wanted to Get Ahead of It’

Jack Dorsey, CEO of fintech firm Block, has been more direct about AI’s role in staffing decisions.

"This isn't just about efficiency," he told shareholders last month while announcing that Block, which operates CashApp, Square, and Tidal, would cut nearly half its workforce.

"Intelligence tools have changed what it means to build and run a company… A significantly smaller team, using the tools we're building, can do more and do it better."

Dorsey predicted a “majority of companies” would reach similar conclusions in the next year. "I wanted to get ahead of it," he added.

Some critics were skeptical, noting Dorsey has overseen at least two major layoffs over the past two years without mentioning AI.

But pointing to AI offers a more palatable explanation than citing cost pressures or shareholder demands, says tech investor Terrence Rohan, who has served on numerous boards.

"Pointing to AI makes a better blog post," Rohan said. "Or it at least doesn't make you seem as much the bad guy who just wants to cut people for cost-effectiveness."

Rohan stressed that the AI justification is not entirely hollow: some companies he supports now use code that is 25% to 75% AI-generated.

That trend highlights the growing risk AI poses to software developer, computer engineer, and programmer roles—jobs historically seen as high-paying and stable.

"Some of it is that the narrative is changing, some of it is that we really are starting to see step changes in productivity," said Anne Hoecker, a partner at Bain who leads the consultancy’s technology practice. "Leaders more recently are seeing these tools are good enough that you really can do the same amount of work with fundamentally less people."

Signaling Discipline While Spending $650 Billion

AI-driven layoffs are also tied to financial signaling rather than technology alone.

Amazon, Meta, Google, and Microsoft plan to collectively invest $650 billion (£485 billion) in AI over the next year.

As executives face investor scrutiny over those costs, payroll—often a tech company’s largest expense—has become a target.

Companies are openly linking the two. In February, Amazon said it plans to spend $200 billion on AI next year, the largest outlay among major tech firms. Its chief financial officer also noted that the company would "work very hard to offset that with efficiencies and cost reductions" elsewhere. Since October, Amazon has cut roughly 30,000 corporate positions.

Google, which has carried out smaller layoffs since trimming 12,000 jobs in 2023, told investors in February that AI investments are central to its growth strategy.

"The more capital we can free up within the organisation to invest, the better we can turn this flywheel of making investments to drive future growth," CFO Anat Ashkenazi said.

While the cost of thousands of employees pales in comparison to planned AI spending, Rohan said large tech firms now seize even minor opportunities to trim expenses.

"They're playing a game of inches," Rohan said of Big Tech layoffs. "If you can even slightly tune the machine, that is helpful."

Hoecker added that reducing staff also reassures investors concerned about the “real and huge” costs of AI development.

"It shows some discipline," she said. "Maybe laying off people isn't going to make much of a dent in that bill, but by creating a little bit of cashflow, it helps."