AI threatens to leave more unemployed in the tech industry by 2025

Tech companies are still grappling with operational changes to achieve financial efficiencies, and AI is positioned as the answer to achieve the goal, but this will lead to more layoffs in 2025.

Tech companies lived in a bubble for almost two years, thanks to the fact that digitalisation became the centre of people's daily lives to avoid Covid infections. But once the pandemic was over, the lockdown was left behind and gave way to activities outside the home.

User habits began to change. One of them was their gradual distancing from technology, breaking the dependency that marked those pandemic years, but which for the industry translated into financial problems. Most companies in the sector applied restructuring to their workforce in order to reorganize their structure and priorities in preparation for future advances.

By the end of 2023, more than 262,000 tech company workers worldwide had been laid off due to the end of lockdown and growing economic uncertainty over concerns about high inflation and rising interest rates, according to data from the consulting firm Statista.

“More than two-thirds of the layoffs occurred in the United States, where both big tech companies and startups in the sector have struggled to maintain their profit margins,” Statista said.

By 2024, the reality of layoffs has changed. The number of employees laid off from their positions in the tech world has dropped significantly. During December, only 818 people were laid off from their jobs by 20 tech companies, which implies an exponential decrease compared to the 5,925 workers laid off by 39 companies the previous month, according to data compiled by the platform layoffs.fyi.

What's coming for 2025?

The coming year will not be easy for workers in the technology world. The advancement of Artificial Intelligence (AI) will be one of the tools that companies will seek to implement more strongly within their operations. According to PwC's Pulse Survey, 49% of technology leaders said that AI is an important part of their business strategy, as well as for products and services.

For example, retail is looking to automate its stores, while the transport and delivery sectors are also betting on using more technology in their services, while customer service will bet on more chatbots and virtual assistants operated by AI. But this is not good news for workers.

Meta is one of the companies that could see the biggest cuts next year as it focuses its efforts on the metaverse and the integration of artificial intelligence (AI), the technologies of which are expensive.

Amazon will also be another tech company to focus its efforts on automation and AI-powered solutions, which may result in fewer roles for human workers in certain departments, according to the Medium blog . “The company is also focusing on reducing its unprofitable businesses, such as its physical retail operations and certain international markets,” it said.

Google is another big tech company that has cut its workforce due to a slowdown in digital advertising revenue. The company has said it would also focus its efforts on AI-based initiatives, but this would mean job cuts.