AI-driven layoffs: Top companies making workforce reductions in 2024

Companies across various industries increasingly adopting Artificial Intelligence (AI) to boost efficiency and reduce costs. While these advancements bring significant productivity gains, they also lead to widespread job displacement. In 2024, the trend of AI replacing human workers is accelerating, with numerous companies already implementing or planning substantial job cuts as a direct result of AI integration.

According to the 2024 Impact of Technology on the Workplace report, businesses are integrating AI more rapidly than ever. While many employees embrace AI as a tool that enhances job satisfaction—59% of AI users report higher satisfaction—the broader impact on employment is far less positive. A recent article in the Harvard Business Review suggests that while AI may not cause long-term macro-level unemployment, it is likely to lead to significant short-term job losses, particularly in white-collar professions that were once considered secure.

Goldman Sachs has projected that AI could eliminate up to a quarter of all current work tasks in the United States and Europe, potentially putting tens of millions of jobs at risk. This wave of automation is not just about improving operational efficiency but also about redefining corporate processes, which could eventually lead to new jobs. However, for many workers, the immediate reality is one of uncertainty and anxiety as they face the possibility of being replaced by machines.

The rapid deployment of AI tools like ChatGPT, which is now used by 65% of businesses according to recent research, has already spurred a wave of layoffs. Companies are increasingly turning to AI to handle tasks traditionally performed by human employees, leading to a significant reshaping of the workforce. As the AI gold rush continues, several major companies have already begun replacing workers with AI, while others have announced plans to do so soon.

The AI-driven job cuts come amid broader layoffs in the tech industry. In 2023 alone, over 212,000 tech workers were laid off, surpassing the 164,709 recorded in 2022, according to data tracked by Layoffs.fyi. This wave of layoffs is not just a response to an uncertain economic environment and waning demand for digital services more than three years into the pandemic but is also fueled by the tech industry's intense focus on AI. For example, in January, Microsoft announced plans to lay off 10,000 employees as part of broader cost-cutting measures while simultaneously making a “multibillion-dollar” investment in OpenAI, the company behind ChatGPT. Similarly, Meta’s CEO Mark Zuckerberg announced plans to lay off another 10,000 workers in March, while also outlining plans for heavy investment in AI.

Even software engineers in Silicon Valley, who once seemed uniquely in demand, now face the risk of losing their jobs or missing out on salary gains to those with more AI expertise. This shift indicates that no position is entirely safe from the reach of AI, and employees across all sectors are feeling the impact.

However, it’s not all about job losses. Some companies are taking proactive steps to balance the workforce by retraining employees to work alongside AI. These efforts aim to equip workers with new skills that align with the evolving demands of the modern workplace, offering a glimpse of hope amid the challenges posed by rapid technological change. As AI continues to reshape industries, the focus on retraining and upskilling will likely become a crucial strategy for companies looking to navigate the complexities of this new era.

Read also_ News: 8 in 10 businesses to boost AI investment this year— but secure use remains a challenge (peoplemattersglobal.com)

Companies Already Replacing Workers with AI

1. MSN: The U.S. web portal MSN was one of the first to replace workers with AI. Since 2020, MSN has used AI to generate news content, resulting in the layoff of dozens of journalists.

2. Google: Google began 2024 by announcing multiple rounds of layoffs, particularly in its ad division. Although the company hasn’t explicitly stated that AI is replacing these roles, the timing coincides with a heavy AI deployment in customer care and ad sales processes.

3. Dukaan: The Indian e-commerce company Dukaan made headlines when it replaced 90% of its customer support staff with an AI chatbot. CEO Summit Shah publicly defended the move, citing significant cost savings and reduced customer wait times.

4. Ikea: Ikea is transitioning its call center operations to an AI bot named Billie. Unlike other companies, Ikea is retraining affected employees to take on new roles, such as interior design advisors.

5. BlueFocus: The Chinese marketing agency BlueFocus replaced its human content writers and designers with generative AI shortly after obtaining an AI service license. This move marked a significant shift in the company’s operations.

6. Salesforce: Salesforce has laid off around 700 workers, with speculations that these roles might be filled by AI as the company increases its investment in artificial intelligence.

7. Duolingo: In January, Duolingo reduced its contractor workforce by 10%, partly attributing the cuts to the adoption of AI for content translation.

8. Turnitin: Turnitin, known for its AI detection platform, laid off 15 employees in late 2023. The company’s CEO indicated that AI efficiency could lead to a 20% reduction in workforce by mid-2024.

9. Klarna: The fintech company Klarna has implemented AI capable of performing the work of 700 customer service agents. While Klarna outsources these roles, the move demonstrates the company's readiness to replace human workers with AI.

Companies Planning Future AI Replacements

1. IBM: IBM has announced plans to gradually replace 30% of its back-office roles with AI over the next five years, affecting approximately 7,800 positions. The company has already slowed hiring for certain clerical roles, with more significant changes anticipated in the next decade.

2. BT Group: The British telecommunications company BT intends to cut around 55,000 jobs by 2030, replacing about 10,000 of these with AI-driven solutions. While the company assures that not all customer service roles will be automated, AI will play a significant role in the future workforce.
   
   Read also: News: Dell slashes 12,500 jobs in bold AI shift: reports — People Matters Global