Big layoffs seem to be coming to big tech.
Days after Amazon had announced 14,000 job cuts, IBM too has said that it will lay off thousands of employees this quarter. “In the fourth quarter we are executing an action that will impact a low single-digit percentage of our global workforce,” a spokesperson told CNBC. “While this may impact some U.S.-based roles, we anticipate that our U.S. employment will remain flat year over year.”
IBM had 270,000 employees at the end of 2024. If its low single-digit percentage is taken to be 3%, that would mean that it would lay off nearly 8,000 employees in the coming quarter.
While IBM didn’t specify what is causing the latest layoffs, it had indicated that AI could impact jobs as far back as 2023. At that point, IBM had said that 7,800 of its roles could be replaced with AI in the coming years. IBM CEO Aravind Krishna had said that these roles were mainly in HR and other back-office functions. “I could easily see 30% of that getting replaced by AI and automation over a five-year period,” he had then said.
Just last week, Amazon had announced it was cutting 14,000 jobs, and hinted that the cuts were largely due to efficiency gains from AI. “What we need to remember is that the world is changing quickly. This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before (in existing market segments and altogether new ones). We’re convicted that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business,” Amazon had told employees in a memo. Other companies too have either laid off employees or slowed down hiring citing gains from AI. Last month, Meta had laid off 600 employees from its AI division. Salesforce has previously said that it wouldn’t hire any software engineers this year because of improved efficiencies from AI, and Fiverr had laid off 30% of its workforce as it became an “AI-first company”. And with large employers like IBM too laying off thousands of employees, the job market for workers in tech might end up being quite stressed in the coming quarters.