The tech sector was hit hard by the announcement this week that IBM would be implementing mass layoffs before the end of the year. The company stated that the reduction would be a “low single-digit percentage” of its worldwide workforce, but it did not provide a specific number. With more than 270,000 workers globally, that translates to thousands of job losses.
The announcement is made at a time when many large corporations are reducing staff members in an effort to reduce expenses and adapt to the rise of artificial intelligence.
A trend among the tech giants
IBM is not by itself. Employee reductions have also been announced by other major players, like Amazon and Meta. While Meta plans to lay off about 600 employees from its artificial intelligence (AI) division, Amazon announced in October that it would cut 14,000 corporate positions.
With reduced staff, more software investment, and a stronger reliance on automation, these changes reflect a change in priorities. By doing more with less people, tech companies are working to increase productivity.
“In the fourth quarter, we are executing an action that will impact a low single-digit percentage of our global workforce. While this may affect some U.S.-based roles, we anticipate that U.S. employment will remain flat year over year.” An IBM representative told CNBC.
Although IBM’s had a recent 10% increase in software revenue, the industry is still affected by uncertainty. Due to automation and artificial intelligence tools that can carry out tasks that were previously completed by humans, many businesses are undergoing a fast digital transformation.
What experts are saying
Companies are using the current economic moment to restructure, according to Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, who told Newsweek that “The environment is full of uncertainty. Some companies see this as the perfect opportunity to get rid of what they consider pandemic bloat. Many businesses kept staff longer than planned and are now trimming down.”
The industry’s emphasis has changed, according to Matt Bruno, Chief Revenue Officer at Laivly, who told Newsweek: “For the past few years, the industry was focused on building large, experimental AI teams. Now it’s all about precision and measurable impact. Companies are embedding AI directly into workflows to help employees make smarter decisions and perform better.”
Although many attribute the cuts to AI, it’s still unclear, said Alex Beene, a financial literacy instructor at the University of Tennessee: “It’s hard to say if AI is directly responsible. In the U.S., IBM’s workforce actually remains flat compared to last year. Still, this is part of a broader trend of mass layoffs that’s fueling fears about how technology will continue to replace human jobs.”
A new era in the tech industry
Kevin Thompson says this is a part of a larger change. “The tech industry is accelerating its adoption of AI, and with that comes the belief that companies can do more with less. Some divisions are shrinking because they rely on outdated technology, while others are being restructured or merged into new areas.”
Businesses are spending less on traditional labor and more on automation and innovation.
What’s next for the employees?
More job cuts may be coming before the year is out, according to experts. “As we approach the end of the year, it’s typical for companies to evaluate performance, tighten operations, and adjust forecasts,” said Thompson.
Businesses like IBM, Meta, and Amazon are relying on software and artificial intelligence to stay competitive, while thousands of workers worry about their future.
However, it this is going to stick for longer… maybe is time to start thinking about how to make AI work for you as an employee instead of fighting it.