Thus far, the tech industry has experienced more than 32,000 layoffs. Why is it the case? The same elements that made 2023 a challenging and unpredictable year in terms of job security. And among the elements at work were poorly handled hiring practices, difficulties generating advertising revenue, and a weakening economy that pushes businesses to make expense cuts, frequently by firing employees.
While businesses attribute the recession to growth-stunting factors, another significant element is the emergence of artificial intelligence (AI) and machine learning (ML) models. The AI revolution was a major contributor in employment losses last year and is still one this year, even more so than the financial crisis.
White-collar employment are under a serious threat from artificial intelligence (AI), according to a survey conducted by US firm Challenger Gray. Automation poses a risk of job displacement for workers in a variety of sectors, such as programmers, corporate managers, attorneys, accountants, finance and insurance professionals, consultants, and others.
According to the data, US corporations fired an incredible 82,307 employees in January, a whopping 136% increase from December. The financial industry led the way in job losses in January, announcing 23,238 layoffs, the most since September 2018. The technology sector declared 15,806 layoffs, a significant increase from the previous month, and followed closely behind.
The food production industry also had difficulties, with 6,656 layoffs primarily ascribed to increased expenses and automation. In a similar vein, merchants reported 5,364 layoffs, a notable increase over the number reported in the previous month. In the media, news organizations experienced a spike in job cutbacks in January, with 528 layoffs—the largest monthly total in almost a year—despite an overall decline in layoffs.
Why are these cuts being made? "Restructuring" was identified as the primary cause of job losses in January, accounting for 28,329 layoffs and 14,555 reductions as a result of "closing" stores, units, and plants. However, just in January, 381 layoffs were attributed to artificial intelligence.
Challenger has observed that since May 2023, when it began recording this reason, 4,628 layoffs had been ascribed to artificial intelligence. Either the companies changed their focus to AI development and hired people for associated roles, or they substituted AI for certain functions and roles.
"The impact of the rapidly expanding adoption of artificial intelligence is starting to be felt in terms of jobs, especially in the media and technology sectors, but it is truly felt across all industries." Nevertheless, many layoff decisions are not being directly attributed to AI by businesses, according to Challenger.
It's interesting to note that, despite AI being held responsible for job losses, businesses are hiring more people in adjacent disciplines as a result of the expanding AI and machine learning industries. The Comptia research states that businesses are in high demand for those with experience in AI and machine learning. The linked field saw its largest monthly growth of the year in January, with 33,727 job postings in that month alone.
