Tens Of Thousands Of Layoffs Are Being Blamed On Ai. Experts Say There May Be More To The Story.

Some of nan largest companies successful America person begun capping aliases reducing their caput counts, blaming nan committedness of productivity pinch artificial intelligence for their decisions.

Yet, truthful far, location is uneven grounds that nan promised cost-savings from AI are really worthy what companies are putting into it.

This leaves immoderate experts questioning whether AI could beryllium serving arsenic a fig leafage for companies that are laying disconnected labor for old-fashioned reasons, specified arsenic financial underperformance aliases world economical uncertainty.

“It’s overmuch easier for a institution to say, ‘We are laying workers disconnected because we’re realizing AI-related efficiencies’ than to opportunity ‘We’re laying group disconnected because we’re not that profitable aliases bloated, aliases facing a slowing economical environment, etc,’” David Autor, a professor of economics astatine nan Massachusetts Institute of Technology, wrote successful an email to NBC News.

“Whether aliases not AI were nan reason, you’d beryllium wise to property nan credit/blame to AI,” wrote Autor, an master connected AI’s effect connected workers.

Amazon joins different ample companies successful justifying caller occupation cuts by pointing to AI.David Ryder / Bloomberg via Getty Images

This week, Amazon announced it had begun a reorganization that would consequence successful nan elimination of 14,000 roles — and said AI was a starring cause.

“The world is changing quickly,” Amazon Senior Vice President Beth Galetti wrote Tuesday. “This procreation of AI is nan astir transformative exertion we’ve seen since nan Internet, and it’s enabling companies to innovate overmuch faster than ever before.”

Yet a fewer hours later, a different Amazon typical tried to downplay nan domiciled that AI played successful nan layoff decisions.

“AI is not nan logic down nan immense mostly of reductions,” said nan representative, who requested anonymity because she was not authorized to springiness her name.

“Last year, we group retired to fortify our civilization and teams by reducing layers,” among different measures, she said. “The reductions we’re sharing coming are a continuation of this work.”

The typical declined to remark connected nan evident mismatch betwixt this 2nd connection astir AI and Amazon’s earlier comments.

But that disparity — coming from a institution arsenic ample and disciplined arsenic Amazon — highlights really difficult it tin beryllium for nan nationalist to verify what companies opportunity astir AI and its domiciled successful unit decisions.

AI’s elusive returns

Amazon joins plentifulness of different companies successful justifying caller occupation cuts by pointing to AI.

Walmart precocious signaled that it intends to support headcount level complete nan adjacent respective years, mostly arsenic a consequence of AI.

Goldman Sachs announced a caller information of layoffs this month, saying it planned to reduce quality roles that AI could perchance perform.

Salesforce precocious reduced its workforce by 4,000, citing “the benefits and efficiencies” of AI.

One mightiness deliberation that these companies were each seeing immense benefits from AI, nan benignant of returns that would make these difficult — and costly — layoffs worthwhile.

Indeed, nan number of companies that study being focused connected AI’s return connected finance has surged successful caller months, according to information from AlphaSense, an AI investigation firm.

So where, exactly, are each these benefits? That’s wherever it gets tricky.

Recent studies person recovered important limits connected nan productivity of AI, astatine slightest successful its existent manifestation.

Out of 1,250 firms surveyed by Boston Consulting Group for a September report, 60% said they had seen “minimal gross and costs gains contempt important investment” successful AI.

Only 10% of nan organizations progressive successful a akin Deloitte survey said they were getting “significant return connected finance from agentic AI," aliases systems that tin make decisions beyond simply pursuing prompts.

Nonetheless, much ample American companies than ever are using, investing successful and measuring nan business effect of generative AI, according to a caller report from UPenn’s Wharton School and GBK Collective.

But for illustration nan different surveys, nan Wharton study shows mixed results. “It’s awesome if you tin shave 20 minutes disconnected an email aliases half an hr reference a report. But that’s not going to leapfrog anything,” said Stefano Puntoni, module co-director of Human-AI Research astatine Wharton and an writer of nan study.

More ample U.S. companies than ever are using, investing successful and measuring nan effect of AI.Chona Kasinger / Bloomberg via Getty Images

Performance issues?

Many of nan aforesaid companies that are making layoff announcements while touting AI investments person besides been nether accrued financial pressure.

Amazon’s layoffs announcement comes up of its 3rd 4th net results, group to beryllium released Thursday.

While analysts expect improvement, location is increasing interest astir accrued title for Amazon’s AWS unreality level from AI. After hitting an all-time precocious successful January, shares of Amazon person been mostly level this twelvemonth and are astir 6% beneath that record.

Meanwhile, Salesforce shares are down astir 29% from a December 2024 high. Some analysts person questioned whether implementing much AI will beryllium capable to stave disconnected nan threat posed by AI to Salesforce’s halfway merchandise lineup.

“No matter what nan existent authorities of nan company, nan communicative is antagonistic and conscionable astir intolerable to disprove,” wrote Jackson Ader, an expert pinch KeyBanc Capital financial group.

Some of nan companies enacting occupation cuts are simply looking to rein successful spending — including firms astatine nan halfway of nan AI boom.

Last week, Facebook-parent Meta announced it was cutting 600 roles successful its AI portion complete concerns that it had go “bloated.”

Rival Microsoft has announced 3 abstracted rounds of layoffs this year, and says it is looking to trim costs elsewhere successful nan institution successful bid to salary for its monolithic AI investments.

Yet moreover firms acold from Silicon Valley are getting swept up.

UPS said Tuesday it had eliminated 34,000 roles from its operational division, which includes drivers and package handlers — a 70% summation from its erstwhile target. UPS besides plans to trim its reliance connected seasonal hires and importantly trim backmost connected conveyance leases.

These changes are “powered by automation,” nan institution said — firm shorthand for AI.

UPS is “freeing up our web to turn successful nan champion parts of nan market,” a spokesperson said. “AI and robotics thief to make jobs safer, while besides reducing repetitive tasks.”