Can We Finally Admit These Tech Layoffs Aren’t Due to AI?
Within the realm of tech, you could say that 2025 was the year of, well, a lot of things. The year of the agent. The year of increasingly expensive RAM and scaling data centers. The year of not really knowing whether artificial intelligence was actually coming for your job or whether the world’s most brazen leaders were simply operating as normal in the world of cutthroat cost-cutting.
It has been the best part of five years since AI broke into the mainstream with the disruptive launch of ChatGPT and everything that followed. These leaders may like you to believe that it’s AI that’s forcing them to lay off thousands of people. I think it’s about time we call out that narrative and ‘pop the lid’.
The Real State of Tech Layoffs
Earlier this month, I reported that tech layoffs had reached almost 40,000 employees. This means that there have already been more tech layoffs in Q1 ‘26 than there were in Q1 ‘25, spanning companies including Amazon, Meta, and Salesforce. A significant majority of them attributed their layoffs to AI advancements or costs in some way.
That being said, it is important to stress that not every major tech company that has initiated layoffs recently has credited (or blamed) AI. Salesforce, for example, did not – employees within its Agentforce team were also impacted. The company has, however, taken part in this trend in the past.
Block, the company behind Square, Cash App, and Afterpay, threw the ‘AI excuse’ into the spotlight after CEO Jack Dorsey laid off just under half of his workforce as the company “embraced” AI. The framing was called “convenient” and not to be trusted. Critics began discussing whether a company could realistically attribute such a large-scale layoff to AI advancements. It didn’t seem plausible, but was there something they missed?
What Does the Research Say?
According to research firm Challenger, Gray & Christmas, AI was cited in the announcements of more than 50,000 layoffs in 2025. The Federal Reserve Bank of St. Louis revealed a “striking correlation” between AI’s prevalence and unemployment increases since 2022, particularly in technology sectors. The report’s authors have reinforced that we could be seeing the “early stages of AI-driven job displacement.”
Earlier this year, Harvard Business Review also released a report that indicated that companies have been laying off employees because of AI’s potential rather than its performance.
So, there are three main points here that play into a wider strategy. As it stands, research shows that:
- AI is being cited as a reason for layoffs more often. There is plenty of data to back up this point, but it still doesn’t answer the question of whether or not the actual reason is AI. This will depend on the company.
- There is a correlation between AI’s expansion and an increase in unemployment. Is this just a coincidence, or is AI actively contributing to these unemployment increases just as the turbulent economic climate is?
- Companies are preemptively cutting jobs because of AI. Is this because they are actually foreseeing the benefits of AI, or because they can use this as a justification?
Because these questions still stand, we cannot quantifiably say with certainty that these layoffs are actually caused by AI. However, can they be influenced by AI? Absolutely.
Three Real Reasons Behind “AI Layoffs”
So, let’s progress with the understanding that AI advancements specifically are unlikely to be the driving force behind tech layoffs. Because, as Orases CEO Nick Damoulakis said: “Are jobs disappearing because of AI? Or because of timeless corporate math? Likely both – messy, intertwined, and less glamorous than the press release.”
With this understanding, we can delve into the AI-related reasons behind mass tech layoffs, which sound a lot more feasible than “AI agents have boosted our productivity by X%, so we don’t need people anymore!”
This is something that the media is beginning to call “AI-washing”, and essentially allows companies to engage in “forever layoffs”, cutting jobs even amid rising profits or strong financial guidance.
I have broken these down into a three-pronged approach, with the belief that a company will lean towards one of the three when it comes to explaining their reasoning.
1. We Need More Money to Spend on AI
AI investments are expensive, and if you’re one of the biggest players in the game or are looking to become one, funding your strategy can get pricey and fast.
Take Oracle. News recently broke that revealed that the CRM veteran is allegedly planning thousands of layoffs within the next few weeks, spurred by rising AI data center costs.
Once solely known for its database software and SaaS capabilities, Oracle’s focus has now shifted to AI, and its investment in AI infrastructure and data centers has been ramping up. The significant capital outlay required to construct new data centers is expected to put strain on Oracle’s financial position.
Wall Street analysts predict that these investments could result in negative cash flow for the company over several years, with returns on this spending not expected until approximately 2030.
What do you do when every spare cent needs to be dedicated to your very expensive AI data centers? Gut the teams and employees that don’t align with your mission, of course!
2. Our Numbers Are Struggling – Let’s Say It’s AI
What is particularly interesting about AI-influenced layoffs is that many of the companies that credit AI are actually doing well at the time, like Microsoft, which continued to beat expectations in quarterly earnings around the time it laid off 9,000 employees.
However, we are beginning to see use cases where tech leaders justify AI-influenced layoffs in the face of sinking financial results. One of the most notable examples this year is Atlassian, which laid off 10% of its workforce amid a further push into enterprise AI territory.
This case could also fit into Scenario 1, but it is important to note that Atlassian has lost more than half its market value since the start of 2026 as traders grow to fear AI will make the software company’s services obsolete.
Another example is fintech banking group Close Brothers, which is set to cut around 600 jobs amid the rollout of AI. This forms part of a wider cost-reduction plan. The goal is to cut costs by £25M in the year ending in September (an increase from the original £20M target), and an additional £60M in the subsequent financial year – a year ahead of schedule.
3. We’re Restructuring Due to What AI Can Do
Lastly, if the layoffs don’t neatly fall into Scenario 1 or Scenario 2, then they likely fall into Scenario 3.
Salesforce is perhaps the most obvious example here, with two separate rounds of layoffs that match this criteria – the first round occurring around September last year, and the second happening just last month.
In its 2025 layoffs round, CEO Marc Benioff revealed that the company had cut 4,000 of its support roles as part of a restructuring effort around AI. He touted Agentforce’s capabilities, insisting that it had allowed the company to rely on less human support staff – something that would go on to be heavily questioned.
Last month, in its latest layoffs round to date, Salesforce’s job cuts affected multiple teams, including marketing, product management, data analytics, and, interestingly, Agentforce. The seemingly random layoffs indicated that this was once again part of a restructuring effort. On the Agentforce side, we came to understand that this is at least partly true as the team experienced a notable shakeup.
The Small Print: AI Layoffs are Likely Coming
So, it appears that at least for now, a fair degree of AI-washing is taking place. Market research firm Forrester put it best in their January report, stating: “Many companies announcing AI-related layoffs do not have mature, vetted AI applications ready to fill those roles, highlighting a trend of ‘AI-washing’ – attributing financially motivated cuts to future AI implementation.”
However, this does not mean that actual, AI-driven rather than AI-influenced layoffs are not coming. As New York Times writer Lora Kelly said: “as unpopular as AI job cuts may be to the public, they may be less controversial than other reasons – like bad company planning.”
Plus, the bottom line always comes down to investors and Wall Street. Layoffs or company restructuring in the name of AI will always look better to them in a way that a straightforward cost-cutting announcement does not, and that’s when AI only has a small part to play. What happens when AI actually becomes powerful enough to replace teams and shave headcounts, even if that wasn’t the company’s intent in the first place?
Although recent research has shown that employment is still growing in most industries exposed to AI, when it comes down to it, we have to believe that these companies will not buckle at the first opportunity of actually cutting jobs because AI has become productive enough to allow it. Even if they have a “human in the loop” mentality, and even if they currently boast a strong company morale. Honestly? I’m not sure I can.
Final Thoughts: What’s Next for Salesforce and Big Tech?
After all of this, only one thing is truly certain: more tech layoffs will happen, and we will see AI get thrown in as a reason (or an influence) more and more.
For Salesforce, there’s TrailblazerDX coming up, where the company is bound to announce an array of new productivity-enhancing AI tools and features. Last year, it announced the concept of “digital labor” and how Agentforce played a role in that – this year, it’s not a stretch to predict that some new talk of how Salesforce is positioned to solve another tech job market crisis.
Now is the time, as an employee, to be realistic. We have seen that companies that are doing well and have AI teams can still be affected by layoffs, so being realistic about the tumultuous future of Big Tech and doing what you can to make yourself as important as possible in the AI era is a necessity.
