Opinion: Will 2024 witness more layoffs?

Hyderabad: Less than 10 days into 2024, Google laid off 1,000 employees from its workforce, followed by its tech counterpart Microsoft with 1,900 layoffs. Among similar actions from other companies, one of the more interesting incidents is how a US-based startup Frontdesk fired its entire workforce over a two-minute virtual call.

Recent data from Layoffs.fyi shows that 104 tech companies have fired around 28,970 employees in 2024. So, what is leading to these mass layoffs? The companies involved have attributed pandemic over-hiring and recession as reasons driving the pink slip situation. However, we cannot stop wondering if the AI boom has anything to do with this.

Changing investment priorities

The economic downturn has been the primary reason behind mass layoffs in companies. The US, which leads the layoff market by a huge margin, has been dodging recession for a long time now. The situation is not different in Canada, which experienced a 1.1 per cent GDP shrink in Q3 of 2023.

Although a slow-growing economy is a valid reason for layoffs, it doesn’t appear as though all the tech giants needed money. Microsoft, which laid off around 10,000 employees, invested $10 billion in AI leader, OpenAI, in early 2023.

Similarly, Google spent $2.1 billion on severance packages while firing 12,000 employees in 2023 and has already paid out $700 million in the first month of 2024. Interestingly, the 2023 fourth-quarter revenue of Google hit $86 billion, a 13 per cent increase from Q4 of 2022.

Sundar Pichai stated that Google’s strategy is to “direct our talent and capital to our highest priorities.” He recently described 2024 as the ‘Gemini era,’ pointing to Google’s alternative to ChatGPT. This brings us to the second reason leading to layoffs.

Changing market needs

Artificial Intelligence or AI, referred to as the most innovative technological advancement of this decade, has resulted in a re-evaluation of requirements by companies. Jobs in the AI field are rising: McKinsey reports how AI could displace 15 per cent of the global workforce by 2030.

The AI industry is witnessing a hiring spree similar to the post-pandemic period, which is not good for ordinary tech workers. IBM CEO Arvind Krishna had earlier mentioned how 30 per cent of its jobs could be replaced by AI in the next five years.

Looking at how tech giants are firing employees and investing in AI simultaneously, we wonder whether automation is a driving force behind the mass layoffs. After all, replacing humans with machines is the easiest way to save money in the long run.

The Covid job boom was real; companies went on a hiring spree, probably recruiting more than what they required. Forbes reported how the median time of a recently laid-off employee stood at two years, indicating that the layoffs have little to do with mass hiring and lavish salary packages in the post-pandemic period.

Is 2024 going to be better for employees worldwide?

The year 2024 has started on a bitter note, so far. Retail, consumer, and finance sectors are leading the layoff trend this year, with tech giants following closely.

German multinational company SAP has announced a restructuring plan around AI that will affect 8,000 employees. The latest layoff was by PayPal, which fired 2,500 employees.

Indian companies are no different from the layoff scenario. E-commerce giant Flipkart has announced a 5 to 7 per cent reduction in its workforce after the performance evaluation. Food delivery platform Swiggy laid off 400 employees as it prepares for the IPO launch.

With recession looming large across the world, more layoffs will likely follow in 2024. And, it is no secret that the AI boom is here to displace the human workforce by large numbers. All we can do is be AI-savvy, upskill ourselves and prepare for an ever-changing job market.

This article is written by Anu Augustine from TechDoQuest (TDQ) in partnership with NewsMeter. Views expressed by TDQ do not reflect the views of the organisation.