AI Won’t Replace Human Jobs, But Why Are There So Many Layoffs?

An unrelenting wave of layoffs continues to sweep the global technology industry. In recent months, heavyweight firms such as Meta and Microsoft have together slashed thousands of employees, even as they intensify their investments in artificial intelligence (AI). The phenomenon raises a big question: if AI is not yet fully capable of replacing humans, why are layoffs becoming more widespread? AI is indeed starting to alter the way work is done in technology companies. Yet the layoffs currently taking place appear to reflect an industry transition phase rather than a direct consequence of automation.

At Meta, for instance, the company is cutting around 10 per cent of its workforce. The move comes alongside a spike in AI spending amounting to hundreds of billions of US dollars. CEO Mark Zuckerberg himself insists that AI is not about replacing people, but about boosting productivity. He even said that going forward, “people will become more important, not the other way around.”

However, behind that narrative, analysts see a major realignment of resources from labour to AI infrastructure. Reuters reports that Meta has boosted AI capital expenditure to around $125-145 billion, while trimming headcount to maintain cost efficiency.

Although the development appears closely linked to AI, several experts say AI is not the sole cause of this wave of layoffs. Cognizant’s Chief AI Officer, Babak Hodjat, says AI is often made the “scapegoat” in corporate restructuring. “Sometimes AI becomes a scapegoat on the financial side. This can happen when companies hire too many people or want to streamline the organisation,” Hodjat told TechSpot.

This view aligns with the phenomenon known as “AI Washing,” where firms use the AI narrative to wrap around older business decisions such as cost-cutting. Indeed, a survey of recruitment managers showed that around 59 per cent of firms admitted that they stressed AI in layoff announcements because it “looks better in the eyes of stakeholders.” In addition to AI Washing, the context of the layoffs and the development of AI during this era are also important.