Big technology firms are laying off employees big time and they are saying it is all about Artificial Intelligence (AI). The feared massacre is happening. But is it AI, or are these companies trying to keep their high profit margins by ‘right-sizing’?
The debate has erupted as Meta has just announced plans to lay off 8,000 employees globally, about 10 percent of its workforce, many of them from India. The company is also discontinuing 6,000 open jobs.
“We’re doing this as part of our continued effort to run the company more efficiently and to allow us to offset the other investments we’re making,” Meta’s chief people officer Janelle Gale told Bloomberg.
The company spent $72.2 billion on capital expenditures in 2025, or costs related to setting up data centers, buying start-ups and other AI infrastructure. That number is expected to climb to at least $115 billion in 2026, Meta said in its January earnings report.
Meta is not the only tech biggie that is on an AI-related spree of spending and sackings. Oracle, founded by billionaire Larry Ellison, announced on 31st March he is cutting 20,000 to 30,000 employees. In February, Block, Jack Dorsey’s company, cut more than 4,000 jobs, almost half the company’s staff, in a major restructuring to integrate AI and create smaller, faster teams. Earlier in January, Amazon said it would lay off 16,000 workers, many of them from its India operations.
If the world is a global village, the integration is almost complete in technology. Thus, it is not surprising India is part of the bloodbath. TCS has claimed it has shed 12,000 employees world-wide since mid-2025, but ground reporting shows the figure is closer to 30,000. The company says shedding 2 percent of its workforce is to manage costs and to restructure in a period of global uncertainty.
Tech Mahindra has let go 3,500 employees while Infosys has been doing ‘silent layoffs’ and exits. Executive search firm Longhouse Consulting said start-ups like Livspace and Zepto had sacked around 4,500 employees since July 2025.
High profits
These massive layoffs have nothing to do with poor financial performance. Meta Platforms, which has just announced a huge layoff, delivered robust figures for 2025 on strong ad revenue. Turnover for the year was $200.97 billion, a 22% year-on-year increase, while net profit logged $60.46 billion.
Likewise, Microsoft demonstrated strong financial performance, with revenue for the 12 months ending December 31, 2025, hitting $305.45 billion with net income at $119 billion. Revenue has consistently grown, from $212 billion from 2023 on the back of key businesses like Azure, Microsoft 365 Copilot, and Gaming (ActiBlizz).
Despite these robust financials, Microsoft sacked 15,000 employees last year, and in April 2026 announced it would offer voluntary retirement to approximately 7% of its US workforce, or about 125,000 employees. The massive cuts this year are aimed not to shore up financials, but to free up funds to invest $80 to 120 billion in AI infrastructure.
Some of these companies are also saying they are shedding employees because AI agents can handle tasks previously requiring large teams, especially in customer support and back-office operations; and that they are reducing management layers and moving towards smaller, flatter teams.
Is AI an excuse?
But on the other side there are those like Sam Altman, CEO of OpenAI, who say all this is ‘AI washing’ - an excuse for layoffs that were already in the works, and nothing to do with AI technology. During the 2020-22 pandemic, many companies hired aggressively. Getting rid of this bloated headcount, these companies are now posing it as “AI related efficiency clean-up”.
It is also got to do with stock price management, as shareholders and investors are positive about AI-triggered staff restructuring but would punish managements who have gone wrong on headcount.
A report in 2025 from Challenger, Gray & Christmas claimed that, while over a million layoffs occurred in 2025 across sectors, only 55,000, or less than 5 percent, were directly attributed to AI.
There is no doubt AI is impacting both jobs and productivity in a big way. Economist and Stanford University’s Digital Economy Lab director Erik Brynjolfsson showed decoupling of job growth and GDP in the United States. His analysis revealed a 2.7 percent year-on-year productivity growth last year mainly attributable to AI impacting efficiency and services.
However, Brynjolfsson’s study also showed that a 13% relative decline in employment for early-career employees especially those in units with a high level of AI exposure. But most experienced workers saw levels of employment that remained stable or grew.
Prominent tech leaders like Anthropic CEO Dario Amodei have warned of a white-collar bloodbath, with AI potentially wiping out 50 percent entry-level office jobs. OpenAI’s Sam Altmen however differs. “We’ll find new kinds of jobs, as we do with every tech revolution,” he said. “But I would expect that the real impact of AI doing jobs in the next few years will begin to be palpable.”
A study by the National Bureau of Economic Research, in February this year found that of thousands of surveyed C-suite executives across the US, the UK, Germany, and Australia, 90 percent said AI had no impact on workplace employment over the past three years following the late-2022 release of ChatGPT.
It is early days of AI and this could change in the near future.