SINGAPORE — An “obsession” with efficiency and the emergence of artificial intelligence (AI) are among the forces driving the new rounds of layoffs at technology companies since the start of the year, experts have said.
On Jan 9, there was a 10 per cent cut of its contractors for the company running language-learning application Duolingo, and it said that AI was 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 from its devices and services business. Shortly after that, messaging platform Discord said that it would retrench 17 per cent of its workers after hiring too quickly in recent years.
This trend of retrenching workers seems prevalent among tech companies barely a month into the new year.
Data from 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.
This wave of layoffs may be reminiscent of the Great Tech Layoffs of 2023, but analysts are hesitant to say if it is a repeat event.
They noted that the current job cuts are smaller than those made in late 2022 and 2023, when companies such as Google, Amazon and Meta laid off thousands of workers after years of rapid growth.
Last year, Google, Meta, Microsoft, Amazon and Salesforce had retrenched 6 per cent to 13 per cent of their workforce.
The current stream of layoffs, analysts said, is a result of a confluence of factors such as “a realignment of business and priorities”, as well as 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.
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 last year as other tech companies followed suit. In total, the sector made redundant up to 262,000 employees last year.
It might appear that this “obsession” with efficiency might have continued into the new year when firms continued to downsize.
Professor Jeffrey Pfeffer at the Stanford Graduate School of Business said that 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 employees, others will probably follow suit.
However, Ms Rachel Sederberg, a senior economist from labour analytics firm Lightcast, is not convinced about whether a “social contagion” is happening right now,
“Businesses make choices about what they want to focus on all the time, and sometimes these come as job cuts,” she said.
Although 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.
RISE OF AI
In line with companies leaning towards “efficiency”, with the rise of AI, businesses are refocusing their resources towards these emerging technologies.
In an article by American news network CNN, Duolingo said that it had let go of some contractors at the end of last year to make room for AI-related changes in how content is generated and shared.
Its chief executive officer Luis von Ahn wrote in a shareholder letter twomonths back:“Generative AI is accelerating our work by helping us create new content dramatically faster.”
In the recent retrenchments, Google also gave 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,” Google said.
“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.”
It might seem like AI will continually displace workers, but Professor Lawrence Loh from the National University of Singapore (NUS) Business School said that AI will not wholly replace human workers; they just need to be more skilled. He was
part of a committee contributing to Singapore’s National Technology Plan.
Mr Art Zeile, chief executive officer of DHI Group, which operates the tech career website Dice, said that specialising in AI and machine learning will therefore be a significant advantage for workers in the tech industry.
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, LinkedIn data showed, growing by 565 per cent between 2016 and 2022, outpacing other countries such as Australia, India and Japan.
The growth in talent-hiring for the AI field in Singapore also rose faster than overall hiring here by 14 per cent in 2022, the Economic Development Board said.
“You also need human talent to manage generative AI,” Prof Loh said. “For example, ChatGPT is not as simple as asking a question. There is a certain skill set needed for the prompts.”
The news of constant reshuffling within companies is unlikely to stop, and it could even signal a “new normal” where layoffs are commonplace, the experts said.
“I think now, we are probably getting used to it,” Prof Loh said. “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.”