Major Layoffs: AI Replacing Employees in these 5 Public Companies

For years, replacing man with machine has been a cost-cutting solution for companies. But it’s no longer the robotic arm causing mass unemployment. It’s ever-evolving Artificial Intelligence (AI).

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Since 2000, over 1.7 million jobs have been made obsolete with the use of AI. 2023 saw companies making major employee cuts in tech, finance, media, and retail industries. In May alone, 3,900 US job losses were directly linked to the use of Artificial Intelligence, according to SEO.AI.

But what does this mean for 2024?

Spectrum News recently reported that 4 in 10 companies “say artificial intelligence is likely to replace some employees in 2024.”

So, who should we be on the lookout for?

1. Amazon

CEO Andy Jassy has stated that Amazon aims to incorporate generative AI throughout all of its businesses.

They even recently partnered with the AI company ‘Anthropic,’ and already we’ve seen a change…

Have you met Rufus?

Launched on February 1st, 2024, Rufus is Amazon’s newest artificial intelligence assistant that can help you with your shopping.

“Rufus meaningfully improves how easy it is for customers to find and discover the best products to meet their needs,” Amazon stated in a blog post.

Already, Dan Clancy, CEO of Amazon’s Twitch, informed employees that they would be cutting 35% of its workforce which is roughly 500 people (reported by Bloomberg news).

But will there be more layoffs?

Amazon announced in November 2023 that it aims to retrain 2 million employees with a voluntary training program that provides free AI skills. It also offers GenAI courses and scholarships to over 50,000 high school and university students.

And this couldn’t come at a better time, seeing as: “Employers expect their workers to earn up to 47% more in salaries if they upskill in AI”, according to a recent Amazon article.

So, for those who are able to upskill, AI could provide workers with more opportunities and financial gain. However, those who are unable may see a severance package.

But it’s not just tech companies we need to keep an eye on…

2. Nike

Ensemble Capital Management recently released its fourth quarter investor letter speculating that Nike “will be able to use generative AI to allow their customers to craft custom shoe designs.”

This will be very different from ‘Nike By You’ as AI will allow customers to “create entirely novel and realistic images based on minimal information entered by the user.”

With their shares losing 19.04% value over 2023, they’ll be looking to implement exciting new ways to boost the company’s economy in 2024. So does that mean job cuts?

Yep!

Nike was one of many companies that made significant job cuts in 2023 and crafted a $2 billion cost-cutting plan for 2024-2026, including severances.They hope that “increasing automation and use of technology” (such as AI) and “simplifying our product assortment” will be a major factor in bringing this $2 billion plan to fruition.

As Nike utilises AI for custom designs and further job cuts loom, SAP takes a similar path. What’s SAP’s move in the era of AI, and how will it impact their workforce?

3. SAP

SAP is the world’s leading enterprise resource planning software vendor, hosting over 105,000 employees worldwide.

But this German multinational software company, which aims to “better improve people’s lives,” plans to cut around 8,000 jobs (7% of its workforce).

Their CEO, Christian Klein, says using AI has resulted in faster coding, sales pitches, and contract checking. This means their workforce can be reduced, as tasks can be performed quicker and more efficiently.

“It’s about accuracy,’ Klein stated in a recent interview with CNBC. “In the business world, there is no room for eras.” He said, “AI Is about doing more with less.”

In Klein’s view, “2024 will be the year that AI moves from the discovery phase into real execution”.

But it isn’t just those in IT that should anticipate replacement…

4. eBay

During the pandemic, eBay went on a major hiring spree to keep up with demand. But they axed 1,000 employees in January, equivalent to 9% of their regular workforce.

The news came to the unlucky staff members through a note penned by eBay CEO Jamie Lannone on January 23rd. Lannone stated that eBay was undergoing “meaningful improvement” and, unfortunately, had to “reduce” its “current workforce.”

An article published on Android Headlines speculated AI was to blame. They said, “All of these major layoffs have taken place after the advent of generative AI in early 2023. As more AI tools became mainstream, more people began to be replaced.”

The axed positions were mainly in text/call-based customer support, roles that can often be automated through AI.

But what about other tech giants like Google? Have they been sucked into the AI revolution?

5. Google

Last year, Google let go of 12,000 employees, and they haven’t stopped for 2024. Google fired thousands of employees across its engineering, hardware, and digital voice assistant units in January, and more are rumored to follow.

HR Review predicts that ‘Google Faces potential layoffs in 30,000 jobs amid AI Developments’.

They aim to increase the use of AI, mainly in their ads department. So those in the ads sales and customer service units may be most at risk.

Google’s CEO, Sunday Pichai, believes this is a necessary step for the Company, enabling it to adapt to an ever-changing landscape.

January of 2024 saw the company spend $700 million on employee severances.

“We have ambitious goals and will be investing in our big priorities this year,” Pichai wrote to employees in a note, “The reality is that to create the capacity for this investment, we have to make tough choices.”

Already the company has laid off 1,000 employees in January this year.

In December last year, the company pushed back its long-awaited AI model, Gemini, after experiencing some issues handling non-English prompts. But now it’s here and is anticipated to be a strong rival for Microsoft in the AI race.

Will AI ever be old news?

The World Economic Forum estimated that artificial intelligence will replace roughly 85 million jobs by 2025. Whether this statistic is bogus or not, public companies are relying on AI more and more every day.

So, I think it’s safe to say that it’s going to be around for a long, long time, molding the future of our working lives.

Discussing the results, Adam Garcia, the CEO of The Stock Dork, remarked:

“I recently read an article that claimed that 2024 could see as many as 170 million layoffs due to AI. That’s a scary number, and most of those terminations will not offer opportunities to retrain or upskill.”

“But AI isn’t a trend that’s going away. In fact, we can only expect more major job losses in the years to come.”

“We can only hope that new opportunities will arise and companies will give fair warning to staff before offering them a severance package.”

You can’t help but wonder if some are taking the easy way out by replacing the traditional workforce with one employee who doesn’t get sick, talk back or need time off and can do the work of thousands of living, breathing human beings. It’s a great deal for big businesses, sure. But if there is nothing to offer those who are terminated, who should be “made responsible?”