SINGAPORE — An “obsession” with efficiency and the emergence of artificial intelligence (AI) are among the forces driving the slew of layoffs at tech companies since the start of 2024, experts have said.
On Jan 9, language learning app Duolingo cut 10 per cent of its contractors, citing AI as part of the reason.
This was followed by livestreaming platform Twitch announcing a cut of 500 people, or 35 per cent of its workforce. Its parent company, Amazon, also laid off hundreds of employees across Prime Video and MGM Studios.
Google followed suit, letting go hundreds of employees inside its devices and services business. Shortly after that, messaging platform Discord said it would retrench 17 per cent of its staff after hiring too quickly in recent years.
This trend of cutting employees seems prevalent among tech companies in 2024. Data from the online tracker, Layoffs.fyi, found that as of Monday (Jan 15), 48 tech companies have laid off more than 7,500 employees in total, just two weeks into the new year.
While this wave of layoffs seems reminiscent of the Great Tech Layoffs of 2023, experts are hesitant to say it is a repeat event.
They noted that the current job cuts are smaller than those made in late 2022 and 2023, when companies like Google, Amazon and Meta laid off thousands of workers after years of rapid growth
In 2023, Google, Meta, Microsoft, Amazon and Salesforce had laid off 6 per cent to 13 per cent of their workforce.
The current deluge of layoffs, experts say, is a result of a confluence of factors such as “a realignment of business and priorities”, and the rise of AI.
TODAY takes a closer look at some of these factors, what these layoffs mean for the tech industry at large and the impact on Singapore.
THE OBSESSION WITH EFFICIENCY
Meta founder and chief executive officer Mark Zuckerberg had described 2023 as Meta’s “Year of Efficiency”, adding that the firm would be undergoing some restructuring to “improve organisational efficiency, dramatically increase developer productivity and tooling optimise distributed work”.
Meta went on to cut 10,000 jobs that year as other tech companies followed suit. In total, the sector made redundant up to 262,000 employees in 2023.
It might appear that this “obsession” with efficiency might have continued into 2024 when firms continued to downsize.
Professor Jeffrey Pfeffer at the Stanford Graduate School of Business said this series of cuts could be seen as a “social contagion” or copycat behaviour.
The behaviour spreads through a network as companies almost mindlessly copy what others are doing. Prof Pfeffer said that when a few firms fire staff, others will probably follow suit.
Whether a “social contagion” is happening right now, Ms Rachel Sederberg, senior economist from labour analytics firm Lightcast, is unconvinced.
“Businesses make choices about what they want to focus on all the time, and sometimes they come as job cuts,” she said.
While it might seem worrying that there are so many announcements of layoffs, she noted that the tech sector has been looking “healthy” ever since the Covid-19 pandemic.
THE RISE OF AI
In line with companies leaning towards “efficiency”, with the rise of AI, companies are refocusing their resources towards these emerging technologies.
In an article by CNN, Duolingo said it had let go of some contractors at the end of 2023 to make room for AI-related changes in how content is generated and shared.
“Generative AI is accelerating our work by helping us create new content dramatically faster,” CEO Luis von Ahn wrote in a November shareholder letter.
In the recent layoffs, Google also cited similar reasons when it made significant cuts in the company’s augmented hardware development team.
“As we’ve said, we’re responsibly investing in our company’s biggest priorities and the significant opportunities ahead,” said a spokesperson from Google.
“To best position us for these opportunities, throughout the second half of 2023, a number of our teams made changes to become more efficient and work better and to align their resources to their biggest product priorities.”
While it might seem like AI will continually displace workers, Strategy and Policy Professor Lawrence Loh from the National University of Singapore’s (NUS) Business School said AI will not wholly replace human workers; they just need to be more skilled.
Hence, specialising in AI and machine learning will be a significant advantage for technology workers, said Mr Art Zeile, the chief executive officer of DHI Group, which operates the tech career website Dice.
He noted that jobs in the AI field are paying more, while the number of AI-related positions grew five to 10 times compared with last year.
Singapore is the fastest-growing market for AI talent in the Asia-Pacific, according to LinkedIn data, growing by 565 per cent between 2016 and 2022, outpacing other countries such as Australia, India and Japan.
The growth in AI talent hiring in Singapore also rose faster than overall hiring here by 14 per cent in 2022, said the Economic Development Board (EDB).
“You also need human talent to manage generative AI,” said Prof Loh. “For example, ChatGPT is not as simple as asking a question. There is a certain skill set needed for the prompts.”
A ‘NEW NORMAL’
The news of constant reshuffling within companies is unlikely to stop, and it could even signal a “new normal” where layoffs are commonplace, said experts.
“I think now, we are probably getting used to it,” said Professor Loh. “This is gravitating towards what we call a new normal. Going forward, this might be the new way for working people to get used to changing jobs, either voluntarily or involuntarily.”
Agreeing, Associate Professor Nitin Pangarkar at NUS Business School said: “Large-scale layoffs indicate a structural shift. But, other than those trends, layoffs will continue to happen – they are very much a part of the sector.”