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Tech Layoffs Predictions 2024: AI Begins to Flex Its Muscles

Although there is an uncertain outlook for 2024, it’s not all doom and gloom; opportunities are also waiting on the horizon.

As business leaders debate whether artificial intelligence (AI) is a force for good on the job-seeking front or if it will bring the axe down on more careers, let’s dive in with some recent examples from Q4 before looking at the wider landscape.

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Spotify Wrapped Shows the Power of AI — While Cutting 1,500 Job

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Many companies are increasingly promoting the idea that the success of AI is not at the expense of jobs.

Spotify’s contrasting actions highlight a complex narrative in the tech industry’s relationship with AI and employment.

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On the one hand, Spotify showcased the prowess of its AI with the annual Spotify Wrapped feature. This sophisticated algorithm-driven tool personalizes user experience and reflects their listening habits and preferences.

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The arguably creepy feature is part of a larger marketing strategy to demonstrate how AI can enhance user engagement and brand presence with initiatives like character archetypes and global listener connections.

However, mere days after flaunting this AI capability, Spotify announced a significant workforce reduction, cutting 17% of its staff. This decision, affecting around 1,500 employees, was a strategic move to streamline operations and manage financial challenges despite its recent profit.

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The juxtaposition of celebrating advanced AI-driven features while simultaneously reducing the human workforce raises critical questions about the impact of AI and automation on jobs.

AI giveth, AI taketh — from an employment angle, it’s a Bittersweet Symphony.

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Dataminr Cuts 20% of Staff

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Dataminr has made significant workforce reductions, citing advancements in AI and operational changes as key factors. Dataminr, a big data startup valued at $4.1 billion, announced a 20% staff cut, amounting to around 150 employees.

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This move aligns with the company’s focus on enhancing its AI platform, including integrating predictive and generative AI technologies. The layoffs are part of a strategic shift to strengthen Dataminr’s financial position and extend its cash runway despite its success in leveraging big data for real-time insights into global events.

Elsewhere, Wall Street giants such as Goldman Sachs have also found themselves compelled to undertake substantial job cuts as part of their strategies to control costs.

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These layoffs appear to reflect a broader trend in the tech industry, where companies increasingly lean on AI and automation for efficiency and innovation, often resulting in reduced human workforce.

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Klarna: Why Hire Dozens of People When One AI Can Do The Job?

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Klarna’s CEO, Sebastian Siemiatkowski, recently revealed a controversial strategic move by instituting a hiring freeze because he believes AI can do the jobs instead.

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What sets Klarna’s approach apart is its commitment to refraining from layoffs and instead focusing on the potential of AI to handle tasks that once demanded significant human effort. Siemiatkowski envisions a future where Klarna becomes a “personal finance assistant,” leveraging consumer-facing AI features to revolutionize user experience and financial decision-making.

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Siemiatkowski told The Telegraph:

“Things that previously took people a lot of time can be done much faster and much shorter, and we need fewer people to do the same thing. The right thing for us is just to say: ‘Let’s not recruit now, let’s see how this plays out’.”

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While this shift towards AI promises undeniable advantages in terms of operational excellence and innovation, it raises pertinent concerns about the impact on employment and regulatory considerations.

As Klarna’s journey into AI-driven transformation unfolds, it serves as a compelling case study in the ongoing evolution of industries, guided by the ever-expanding capabilities of AI technology.

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Preparing for More Job Cuts in 2024

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Randstad RiseSmart’s Global Severance report suggests the global employment landscape is undergoing a significant transformation, with a staggering 96% of organizations already implementing some form of downsizing in the past year, underscoring the widespread impact of economic challenges and shifting business strategies.

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Even more telling is the expectation that 92% of these employers are bracing for further headcount reductions in 2024.

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Alarmingly, the survey reveals a critical gap in organizational preparedness; most of these companies appear to lack robust strategies or resources to support their employees effectively through these impending job cuts. This situation highlights the need for more comprehensive severance and transition plans and raises questions about the long-term implications for workforce morale and the broader socio-economic fabric.

The good news is while AI is enhancing efficiency in fields like software development and IT operations, it struggles with tasks requiring human intuition and manual dexterity. Interestingly, jobs least likely to be affected by AI are those rooted in human empathy and physical skills, such as healthcare, skilled trades, education, and creative professions.

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Understandably, many are beginning to ask which careers are safe and which are at risk. But as AI matures, its role should be seen as more of a collaborator than a replacement. As Businesses increasingly leverage AI to enhance efficiency and human experiences, this technological embrace brings forth the critical challenge of maintaining ethical standards.

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So, companies must invest in employee training for AI-related skills, ensuring a workforce that complements AI’s capabilities. This approach safeguards jobs and propels the workforce toward a more advanced, AI-empowered future where technology and human talent synergize for greater innovation and efficiency.

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Upskilling into AI May Be One Answer

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In 2023, the global tech sector faced a paradox: a 50% increase in tech layoffs, resulting in over 240,000 job losses worldwide, coincided with significant investments in artificial intelligence (AI). This scenario highlighted a complex interplay between technological advancement and job insecurity, casting a shadow over the future of employment.

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Despite these challenges, the US labor market showed resilience and adaptability, with a growing need for workers skilled in generative AI, as indicated by a notable increase in job postings mentioning “GenAI.” This trend suggests a shift towards a more AI-integrated job market, requiring professionals to adapt and acquire new skills to thrive in an evolving employment landscape.

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Why Are There So Many Tech Layoffs?

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Anna Tavis, clinical professor in human capital management at New York University, believes that all industries will continue to “right size” their staffing levels in pursuit of efficiency, cost cutting, and rationalizing their skills portfolio.

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“In the aftermath of the recruitment surge post-pandemic, its lingering effects remain evident. Tech firms overspent on growing their staff sizes. Now, they experience a pressing need to recalibrate their ranks and align to the needed levels.”

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As we stand on the threshold of a new era in the workforce, driven by rapid advancements in artificial

intelligence, the conversation around AI’s impact on labor costs has reached a fever pitch. Business leaders and analysts are examining the balance between automation and human skills. Tavis offers a little food for thought for companies contemplating an AI-powered future.

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“There is a heightened anticipation surrounding the potential labor cost efficiencies from adopting AI. While it is believed that AI might replace some jobs or parts of jobs currently performed by human workers, it is important to note that these expectations might be ahead of their time. Nevertheless, given AI advancements, companies are preparing for a major organizational shift.”

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In the wake of sweeping layoffs at major corporations like Twitter, the dialogue surrounding corporate restructuring and its implications has gained new urgency. Such high-profile moves don’t merely impact the companies directly involved; they set the tone for industry-wide trends, creating ripple effects that influence organizational behavior across the board.

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“At its core, the market continues to reward workforce reductions, no matter how compelling the evidence highlights their damaging effect on companies’ cultures. Industry sectors likely to see layoffs in 2024 include tech and tech-related firms and consulting services.”

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Vulnerable Roles in Tech

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Nick Gausling, a seasoned business consultant and managing director of Romy Group LLC, sheds light on the intricacies of the tech world under these conditions.

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“The tech sector relies heavily on stocks and borrowing. When interest rates rise, borrowing becomes more expensive, and stocks decline. Rates are at their highest level in over two decades and climbing, making more tech layoffs virtually inevitable.”

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Gausling’s insights tap into the core challenges facing established tech companies and fledgling startups, illuminating the factors that dictate their survival, scalability, and employee retention strategies in this high-stakes environment.

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Many tech startups scramble to get any funding they can, even on unfavorable borrowing terms. Those who succeed might survive today but cannot service the debt tomorrow. If your company’s unit economics aren’t already profitable, it’s a precarious situation.

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While companies rigorously evaluate roles indispensable to their core operations versus those considered

more peripheral, Gausling also emphasizes the heightened vulnerability of specific roles in these uncertain times.

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“Staff who directly contribute to building, selling, or servicing the company’s core product are least likely to be laid off in 2024, while those in middle management and support roles are most vulnerable. But in new or experimental divisions outside the company’s bread and butter, even engineers and salespeople need to

watch out.”

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Future-Proofing Your Career

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On the flip side, Cliff Jurkiewicz, vice president of global strategy at Phenom, an HR technology company, believes a positive side exists. The good news is there’s a tremendous opportunity for tech jobs in other industries.

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“The retail and communications industries are going through massive technology upgrades. AI is driving expansion in tech. Like disruptive technologies before it, AI is creating new roles and new skill requirements for existing roles.”

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AI Curators work closely with expansive language data sets to train AI algorithms and ensure that their outputs align with the organization’s goals. AI Ethicists serve as ethical compasses, grappling with questions of fairness and transparency.

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“Think of Jeff Goldblum’s character in Jurassic Park always pushing beyond “can something be done” and asking “but should it be done?”

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AI Policy Makers and Legal Advisers scrutinize technical and societal impacts, working in tandem but distinct from AI Ethicists. AI Trainers educate the workforce and the AI itself, acting symbiotic with AI Curators.

AI Auditors are responsible for ensuring the accountability of AI systems, while AI/Tech Interpreters adopt a more strategic lens, translating the overarching impact of AI technologies within an organization.

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These roles signal AI’s maturation in the enterprise and underscore the multifaceted responsibilities that come with its adoption.

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“Tech professionals have an advantage. Their skill sets are highly marketable to the tremendous opportunities for tech roles in other industries. They also have the background and ability to simplify upskilling for the new AI-based roles. And these new AI roles are just the beginning, with others not far off on the horizon.”

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The Six-Fold Rise of Data Jobs in the Tech Industry

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Linda Lee, chief people and culture officer of Velocity Global, shared job trend data from the past five years, which shows that data-related jobs have increased six-fold in new employment from 2018 to 2022.

To get more specific about which data roles are leading the charge, almost a quarter of these jobs were data scientists and data engineers in 2022.

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Lee believes this will likely continue to be a focus in 2024 as data reigns king in business.

“Because borders no longer restrict one’s options for work, we expect borderless hiring to continue its upward trajectory as companies look to boost revenue streams, broaden talent pools, and retain quality talent.”

As the tech industry solidifies its role as a global change agent and growth engine, understanding the job market trends for 2024 is becoming crucial for both seasoned professionals and newcomers eager to make their mark.

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“The tech space catalyzes worldwide change, innovation, and growth. The job market has been challenging the

past couple of years, but the industry’s potential drives those to stay in the space and new talent to enter. The industry will only grow in 2024, and according to the data, enhancing your data skills and highlighting your managerial experiences will help you break through and move up.”

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Curiosity as Currency: Why the New Tech Industry Values an Agile Mindset

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Martha Angle, VP of talent management and inclusion at OneStream Software believes that the evolving tech industry demands adaptability and innovation from employers and job seekers.

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Traditionally, technical roles often revolved around tightly defined job functions, leading to limited exposure to diverse technologies and projects. This specialization frequently meant not everyone had access to the latest technologies or the opportunity to work on exciting and innovative projects.

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As a result, employees could find themselves pigeonholed in their roles, lacking the chance to explore broader horizons within the tech landscape. This limitation not only hindered individual career growth but also constrained organizations from tapping into the full potential of their workforce.

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“The current shift toward a more flexible and adaptable approach in the tech industry is breaking down these historical barriers. Employers recognize the value of offering diverse opportunities and encouraging employees to stretch beyond their comfort zones, fostering a more dynamic and innovative work environment.

This transformation benefits job seekers and organizations, allowing for a more agile response to the ever-evolving demands of the tech sector.”

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Conversely, job seekers must exhibit proactive curiosity and a genuine enthusiasm for learning and experimenting with new technologies.

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“Relying solely on an MIS degree to demonstrate technical proficiency is no longer sufficient.”

Employers seek evidence of candidates exploring tech stacks beyond Java and Python or taking on independent projects to delve into languages like C-sharp or experiment with generative AI tools. Those who break free from their silos gain a competitive advantage.

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The Case for Automated Onboarding and Offboarding

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Arthur Lozinski, CEO of Oomnitza, who helps companies automate their technology management processes, shared how he sees companies of all sizes across all sectors and geographies prioritize offboarding process automation to address efficiency, security, and cost considerations.

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“It could indicate they understand the fluidity and unpredictability in today’s business environment and want to be prepared to offboard securely at scale if needed

Additionally, workforce adjustments are always made for holiday and seasonal work, shifts in demand or business strategy, and to address higher than anticipated voluntary turnover. So, no matter what, high rates of personnel change are the new reality.

What I can say is that since the start of the pandemic, one of our top use cases has been automating the processes that drive employee onboarding, offboarding, moves, and business reorganizations.”

Lozinski also shared research that revealed how inefficient and manual offboarding and onboarding processes can increase the cost and business risk of employee turnover.

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We found that a third of enterprises lose more than 10% of their associated technology assets, and 42% experience unauthorized access to SaaS applications and cloud resources when offboarding workers.

And 50% lose at least 10% of their annual expenditures on underused, unmanaged, or unaccounted-for SaaS/cloud resources. Those hidden costs add up, effectively acting as a layoff tax. Who knew cost-cutting could be so expensive if not done appropriately?

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The Bottom Line

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As we confront the complexities and contradictions of the tech employment landscape in 2024, the onus is on us — whether as business leaders, job seekers, or industry observers — to adapt, innovate, and ethically navigate this evolving terrain.

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While challenges loom large, from unexpected layoffs influenced by economic variables to the relentless drive for efficiency, the industry also holds untapped potential.

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New roles are emerging at the nexus of technology and ethics, governance, and strategic integration, signaling not just the maturation but the humanization of AI and data science within the enterprise.

For business leaders, the mandate is clear: be proactive rather than reactive. You are not merely managing technology; you are shaping the future of work in a world increasingly mediated by it.

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Whether investing in AI curation teams to guide machine learning efforts or focusing on the “layoff tax” that accompanies unthoughtful downsizing, strategic foresight combined with ethical considerations can turn challenges into opportunities.

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For professionals, emphasizing specialized skills doesn’t just imply employability; it advocates for adaptability and lifelong learning. A path of continuous learning will allow you to evolve with the job market and its shifting requirements.

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As we enter a year of unparalleled technological change, let’s not lose sight of the human element that powers innovation and shapes its impact. Beyond the data and algorithms, our collective choices will define the tech job market and society at large. In navigating this future, remember: it’s not just about smarter technology but a more inclusive world for everyone.

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Reference: https://www.techopedia.com/tech-layoffs-predictions