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AI Job Boom Drives Tech Layoffs

Tech layoffs are now part of everyday news. As technology companies channel their investments into artificial intelligence and hire extensively, experts predict ongoing layoffs in other sectors throughout 2024. Over 20,000 tech workers have already faced job losses in the current year, as reported by layoffs. FYI.

Dan Ives, managing director at Wedbush Securities, told CNBC, “Google and the rest of Big Tech are betting big on AI while cutting back on non-strategic areas. Layoffs will continue to happen for Big Tech in some areas. At the same time, the hiring frenzy in AI will be unprecedented as this arms race continues across the tech world.”

Recent Tech Layoffs:

Google’s CEO, Sundar Pichai, recently cautioned employees about further job cuts as it shifts its focus and resources toward AI. Pichai emphasized ambitious goals and upcoming investments in priority areas, acknowledging the necessity for tough decisions to accommodate these changes.

In a January 17 memo, Pichai hinted at the imminent sharing of Google’s AI goals for 2024, stating, “The reality is that to create the capacity for this investment, we have to make tough choices.”

Tech Layoffs | Google CEO Sundar Pichai defends Apple search deal in trial | The Hill

Google’s recent job cuts were part of an efficiency drive to concentrate on key product priorities spurred by competition with Microsoft, which integrated ChatGPT into Bing search. This move prompted Google to enhance its search engine with additional AI features.

“We’ve shifted away from a zero-interest-rate environment, and now there’s a pressing need to cut costs for increased investment in AI. The training and deployment of AI come with significant expenses, and that’s a key factor driving Google’s current strategy,” remarked Alex Kantrowitz, founder of Big Technology, during CNBC’s “Power Lunch” last week.

Kantrowitz anticipates a similar trajectory for other major tech companies, expecting them to follow suit, as he mentioned on January 18. In a parallel move, German enterprise software company SAP revealed plans on Tuesday to restructure approximately 8,000 roles. The aim is to “enhance its focus on key strategic growth areas, particularly business AI, in 2024.”

SAP clarified that most impacted positions would be addressed through voluntary leave programs and internal re-skilling initiatives, ensuring that headcount remains consistent by the year’s end.

SAP - Wikipedia

Amazon, known for its robust investments in AI, recently implemented substantial job cuts in its video-streaming and studio divisions and reductions in its Twitch live-streaming platform and Audible audiobook unit. This move follows the company’s strategy to optimize resources.

Mike Hopkins, overseeing Prime Video and MGM Studios divisions, explained that Amazon has strategically identified areas for reducing or discontinuing investments while boosting efforts in high-impact sectors.

In a parallel development, Amazon Web Services (AWS), the e-commerce giant’s cloud service arm, announced on January 19 its plan to invest a significant 2.26 trillion yen ($15.24 billion) in Japan by 2027. This investment aims to expand the cloud computing infrastructure vital for supporting AI services, showcasing Amazon’s commitment to technological advancement on a global scale.

While establishing itself as the world’s leading cloud provider, AWS lagged in the race for generative AI. It introduced its large language model, Titan, only after Microsoft’s reported $13 billion investment in ChatGPT-maker OpenAI and Google’s launch of the AI chatbot Bard. Despite its dominance in cloud services, AWS entered the generative AI arena later than its key competitors.

Layoffs Extend Beyond Tech Sector

The wave of job cuts is not exclusive to the tech industry, as several companies are streamlining their operations to focus on AI-driven ventures.

In a recent regulatory filing, U.S.-based online used-car marketplace Vroom disclosed plans to eliminate approximately 800 jobs. The strategic shift involves concentrating on automotive financing and AI services while shuttering its e-commerce and used-vehicle dealership businesses.

Similarly, Duolingo’s language-learning service reportedly let off 10% of its contractor labor to focus on using AI to create content.

According to industry expert Kantrowitz, the traditional approach of firms hiring without concern for previous cutbacks is no longer viable in the current landscape.

The trend of significant layoffs gained momentum in 2022 and persisted through 2023, spurred by global macroeconomic challenges such as elevated interest and inflation rates. Consumer spending is retrenched amid uncertainties in the global economy, prompting companies to reassess and restructure their operations.






Editorial Staff
Editorial Staff
Editorial Staff at AI Surge is a dedicated team of experts led by Paul Robins, boasting a combined experience of over 7 years in Computer Science, AI, emerging technologies, and online publishing. Our commitment is to bring you authoritative insights into the forefront of artificial intelligence.


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