There’s another way AI is driving downsizing. It has nothing to do with the technical capabilities of coding tools or chatbots.
Amazon, Meta, Google and Microsoft jointly plan to spend $650bn (£485bn) on AI next year.
As executives look for ways to absorb these costs and cushion investors, many of them end up in payroll, which is typically the single biggest expense for tech companies.
Companies aren’t exactly hiding their connections.
Amazon executives announced in February that the company plans to spend $200 billion over the next year on AI investments, the largest of any major tech company.
At the same time, the company’s chief financial officer said that other parts of the company will be “working very hard to offset that with efficiencies and cost savings.” Amazon has cut about 30,000 employees since October.
Google, which has made several smaller layoffs since cutting 12,000 jobs in 2023, offered similar assurances to investors in February while discussing plans to invest in AI.
“The more capital we have available for investment within our organization, the better we can get the investment flywheel running and drive future growth,” said Chief Financial Officer Anat Ashkenazi.
For example, the costs of Amazon’s 30,000 employees seem small compared to the company’s AI spending plans, but Rohan says a company of this size will take every opportunity to cut costs going forward.
“They’re playing for inches,” Lohan said of Big Tech’s layoffs. “It would be helpful if you could adjust the machine even a little.”
Mr Hocker said the layoffs also signaled to stock market investors concerned about the “substantial and huge” costs of developing AI that management was not simply handing out a blank check.
“It shows some discipline,” Hocker said. “The layoffs probably won’t have a big impact on the bill, but any little bit of cash flow will help.”
