Tech layoffs continue after ‘Year of Efficiency’
BIG Tech’s “Year of Efficiency” may be over but recent layoffs at Google and Amazon have signalled the firms will keep cutting jobs in 2024 as they make big investments in generative AI.
Analysts and industry experts believe the layoffs would be smaller and more targeted this year, with firms that are racing to catch up in the AI race more likely to make such moves to offset the billions of US dollars they are spending on the tech.
Alphabet suggested that last week, saying it plans to invest in its “biggest priorities” as the Google parent laid off around a thousand employees across multiple divisions, including in its voice assistant unit and team responsible for Pixel and Fitbit.
Even its advertising business was not spared, with a report on Tuesday (Jan 16) saying that hundreds of jobs were being cut at the unit.
Amazon.com laid off several hundred employees in its streaming and studio operations last week. Hundreds of jobs were also cut in its Twitch live-streaming platform and Audible audiobook unit, according to media reports.
Overall, tech firms have let go more than 7,500 employees so far in January, according to tracking website Layoffs.fyi.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“No company wants to get left behind by the AI revolution and they are all making sure they have these capabilities and are prioritising them, even when it is at the expense of other initiatives,” D A Davidson analyst Gil Luria said.
Both Google and Amazon are aggressively investing in their AI efforts. Google, which is trying to close the gap with Microsoft in the AI race, last month unveiled its long-awaited Gemini model, while Amazon is developing a model codenamed “Olympus” to compete with ChatGPT-maker OpenAI’s GPT-4 model.
Hiring priorities
Still, the total size of the layoffs is expected to be much smaller, compared with last year’s massive cuts, as tech spending picks up on the back of a more stable economy.
The tech sector shed 168,032 jobs in 2023 and accounted for the highest number of layoffs across industries, according to a report by Challenger, Gray and Christmas earlier this month.
Those were led by tens of thousands of cuts at tech giants including Alphabet, Microsoft, Amazon and Meta, whose CEO Mark Zuckerberg termed 2023 as the “Year of Efficiency”.
“I don’t think there will be a similar reckoning. (Last year) tech firms were shedding all these employees they hired during the pandemic,” said GlobalData analyst Beatriz Valle.
“AI is driving a lot of dynamism but this only means that tech companies will be changing their hiring priorities.”
Some tech firms have been offering hefty salaries for AI roles, with a report saying last year that Match’s Hinge dating app was looking for a vice-president of AI with a base salary of up to US$398,000 a year and that Amazon was offering a top salary of US$340,300 for a senior manager of applied science and genAI.
The spending is expected to deepen investor expectations on the returns from genAI, but the payoff for most companies could take longer to play out, according to analysts and experts.
So far, only Microsoft and chip giant Nvidia have emerged as big winners from the boom.
Daniel Keum, an assistant professor of management at the Columbia Business School, said past evidence shows it can take a decade or more to profitably make money from new technologies.
“The question is ‘is it different this time for AI?’ I am pessimistic, but many smart people believe it will be much shorter this time,” he said. REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Telcos, Media & Tech
Baidu ‘confident’ AI will sustain growth after sluggish first quarter
Newly privatised Toshiba to cut 4,000 jobs in restructuring drive
Siemens misses profit forecast as industrial business struggles
Microsoft asks hundreds of China staff to relocate, WSJ reports
SoftBank aims to help call centre workers by ‘softening’ angry customer calls with AI
Cisco forecasts fourth-quarter revenue above estimates on enterprise demand