According to the website Layoffs, 57,505 people lost their jobs in the last three months. These jobs were mostly in the tech sector and related to the widespread use of artificial intelligence. Companies such as Dell, Expedia, Farfetch, and Cisco were behind this massive wave of layoffs. This trend began last year after a few months of releasing ChatGPT from OpenAI. Last year, the total number of layoffs in the tech sector reached a staggering amount of 263,180. The number is projected to increase this year.
Why are there massive layoffs?
The trend of massive layoffs began in 2020 because of the spread of COVID-19 around the world. According to Layoffs.fyi, the tech sector had to let go of 80,998 employees. When comparing the layoff results of 2020 to the first quarter of 2024, it’s easy to see that the impact of artificial intelligence on the tech industry is far greater than COVID-19.
According to Jeff Shulman, a professor from the Foster School of Business at the University of Washington, “There is a herding effect in tech. The layoffs seem to be helping their stock prices, so these companies see no reason to stop.”
The layoffs are helping investors fatten their pockets. The inflation rate plays a pivotal role in any decision made by big tech companiesz. The current inflation rate is 3.15%, which makes companies plan on saving costs by investing on generative AI technology. Massive layoffs seem to be the trend in Silicon Valley, and Wall Street loves it.
Which companies are on the list?
The biggest layoff in January of 2024 was from the German company SAP. The enterprise software company has terminated 8,000 people. Paypal followed the same strategy, resulting in the termination of 2,500 employees. Google and Cirtrix laid off 1,000 people each. In February, Cisco, headquartered in the San Francisco Bay Area, fired a total of 4,250 people. This has resulted in a reduction in their workforce by 5%. The e-commerce luxury cloth company Farfetch followed by releasing 2,000 employees.
Last month, Dell fired 6,000 employees, making the total number of terminated employees in 12 months jump to 13,000. Dell is implementing a new strategy aimed at lowering costs and restructuring its team. The massive layout at Dell is a result of an 11% decrease in revenue. According to a reddit user named bmanxx13, Dell will continue to terminate people until it reaches a headcount of less than 100,000.
Artificial intelligence replaces employees
Other reddit users shared their experiences after being terminated. A reddit user named scruubadub said that he was replaced by cheap labor and an AI assistant. Other Redditors shared similar stories. Almost all online customer services are operated by chatbots.
Letting go of 263,180 employees in one year is insane. The trend of massive layoffs isn’t stopping soon and 2024 is expected to see more termination of employees. The emergence of advanced technologies like artificial intelligence and machine learning, plus the economy, plays a crucial role in the decision-making and strategies of big tech companies.
