In a strategic move to invest in generative artificial intelligence (AI), major tech companies have collectively cut 34,000 jobs since the start of 2024.
What happened: Companies like Microsoft Corp MSFT, Alphabet Inc GOOGLE GOOG, PayPal Holdings Inc PYPLAND eBay Inc EBAY are restructuring their workforce to focus on artificial intelligence, the Financial Times reported.
Analysts believe these layoffs are part of a broader industry trend in which companies are reevaluating their workforces and reallocating resources to invest in new technologies. This move is also seen as a demonstration of companies’ commitment to cost discipline.
According to Layoffs.fyi, a website that tracks job cuts in the industry, a total of 138 tech companies have laid off staff this year. This number is significantly lower than the 263,000 job cuts that occurred in 2023, following a period of overinvestment during the pandemic.
“Anyone who works in the tech or gaming industry right now is worried about layoffs to some degree, whether for themselves or someone they know,” he said Autumn Mitchella quality control tester at Microsoft’s video game subsidiary ZeniMax. “You see a company announce layoffs and think, ‘Here we go, who’s going to be next week?’”
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Companies are also reevaluating their investment priorities and cutting positions in non-core divisions. For example, Amazon.com Inc AMZN has cut hundreds of jobs at its video streaming platform Twitch.
Because matter: The technology sector has seen a significant shift in employment trends. After a period of massive hiring during the pandemic, the sector saw a wave of layoffs in 2023, with companies like Microsoft AND Meta Platform Inc HALF announcing thousands of job cuts.
Despite a declining trend in tech layoffs during the second half of 2023, the trend reversed in January, with the number of laid-off employees in the tech sector increasing by 304%. This trend has been attributed to various reasons, including restructuring, cost reduction and the push towards a leaner organization.
Amid these layoffs, tech companies are also making significant changes in restructuring and investing in AI. Google, for example, estimates it will spend $700 million in the first quarter of 2024 on employee severance pay amid a flurry of layoffs in the tech sector.
Read next: Elon Musk calls Disney ‘GEstapo’ after leak: ‘No wonder most of their content… sucked’ –
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