Technology industry | AI like termination International

And then it all happened very quickly: At the beginning of July, the management of the US software giant Microsoft announced the elimination of up to 9,000 jobs. An employee told the job portal "Business Insider" that he had been given until July 8th to sign a severance agreement. After that, he would receive 60 days of paid leave. The termination came as a complete surprise to those affected, especially since the last wave of layoffs had only taken place in May. Moreover, Microsoft had just reported record profits and a significant increase in revenue. Its market capitalization, which has recently risen sharply, is approaching the four trillion US dollar mark.

Microsoft is no isolated case. IT companies are announcing job cuts almost daily – most recently, the New York-based video software company Kaltura, which is slated to cut ten percent of its workforce. Globally, job losses in the technology sector have totaled nearly 150,000 employees so far this year, according to a recent analysis by the payment service provider RationalFX. The analysis evaluated layoff announcements from companies up to August 5th. The actual number could be significantly higher, according to the authors, as dozens of companies have not yet officially confirmed job cuts.

The wave of layoffs in the tech sector began in 2022 and, according to estimates, has affected at least half a million jobs so far. During the coronavirus pandemic, massive hiring was initially undertaken to meet the sudden increase in demand for remote work and online shopping. Many employees were subsequently no longer needed. Since weak forecasts and declining sales were added to the mix, many corporations and startups have been focusing on cost reduction through staff reductions. This is especially true as investors are increasingly pushing for profitability due to high interest rates and the uncertainty caused by trade conflicts. Mergers and restructurings are also leading to job cuts.

According to the study, 71 percent of layoffs this year affect companies in the US, which also has the world's highest concentration of tech companies. Other key countries such as India, Japan, and Switzerland are also affected. Even in Germany, 800 jobs were cut this year. Since the beginning of the wave, nearly 8,000 employees in over 58 companies have been affected, most notably at the software giant SAP.

US chipmaker Intel leads the RationalFX list of layoffs in 2025. The company expects to reduce its workforce by 20 percent by the end of the year: 33,900 employees. The former market leader first missed the boat in smartphones and tablets, and later also in AI chips and data center equipment. Manufacturing problems also arose. Now, Intel is to be transformed into a contract manufacturer, which is why it has abandoned plans for new semiconductor plants, for example, in Magdeburg . As announced over the weekend, the US government has acquired a 10 percent stake in the ailing company in return for the billions of dollars in subsidies from the Biden era and for strategic reasons.

While Intel is an exception, the wave of layoffs is a common thread throughout the industry, affecting equally profitable companies. Microsoft ranks second with 19,175 layoffs. It is followed by the Indian IT services provider Tata Consultancy, which announced the elimination of 12,000 jobs in July, citing "skills mismatches."

RationalFX analysts have identified a new trend as a "structural shift toward automation and AI." The tech industry has long recognized artificial intelligence as a growth area , and now this is also turning inward. Microsoft is no longer just developing its chatbot Copilot, but is also focusing on integrating AI into its operations and, according to reports, is encouraging its employees to use AI tools in their daily work. India's IT service providers are replacing some entry-level positions with automation tools. This is mostly happening quietly. IBM is one of the few companies openly discussing this: In March, the IT giant announced around 9,000 layoffs by saying that AI would replace entire communications and marketing departments.

"As artificial intelligence spreads rapidly and finds its way into more and more industries, its impact on the labor market is becoming increasingly tangible," explains Martin Cohen of the analysis portal NewsworthyData. "Numerous companies are replacing hundreds of employees with automation tools, chatbots, and even programmable AI." Jobs in administration, customer support, and repetitive programming tasks are particularly affected, he told "nd." There is a "mismatch": Tens of thousands of AI-related positions will also be advertised worldwide this year, including machine learning engineers and positions in AI ethics, infrastructure, and product integration. "However, these roles are often highly specialized and concentrated in a few centers such as Silicon Valley, Seattle, London, and Shenzhen." However, Cohen believes we are still at the beginning of what will likely be a long-term transformation. "As AI systems mature, they will simultaneously create demand for new roles in supervisory, technical, and human-AI collaboration." This will not necessarily lead to a permanent net loss of jobs.

The trend toward increasing efficiency with fewer staff is currently being celebrated in the industry, according to an article by the financial portal Eulerpool. "Revenue per employee" has become a key metric in the tech sector. Startups and companies rely on minimalist teams to achieve maximum efficiency. This is certainly problematic: Leaner organizations can become problematic in the event of shocks such as supply chain crises or AI malfunctions. Furthermore, technological advances can replace routine, but not interpersonal skills. Creativity and emotional intelligence, however, are gaining in importance, according to Eulerpool Research.

Upskilling employees could even prevent layoffs. Many companies under financial pressure, for example from their shareholders, opt for the latter, explains data analyst Cohen. "Companies that invest in reskilling are generally better able to adapt to the evolving challenges associated with AI." This helps preserve institutional knowledge, avoid talent gaps, and maintain a healthy work environment.

However, the wave of layoffs is causing uncertainty among employees. "For marginalized groups, layoffs are potentially devastating," states a report by "Golem Karrierewelt" on the situation in the United States. Non-US citizens face deportation if they fail to find a new job within a specified timeframe. Women, who already face low salaries and limited entry and advancement opportunities, are at increased risk of layoff: Recently, 56 percent of those laid off were women – even though just one-third of employees in the tech industry are female.

However, according to the report, employees have a chance of finding a new job quickly, even if it may be lower-paying. Established industries are trying to snag tech experts to update their IT infrastructure or tackle long-delayed projects. In the United States, the average unemployment rate for tech workers is 8.1 weeks. There are more open positions in the industry than people to fill them. The Microsoft employee who was fired virtually overnight may therefore have already found a job elsewhere.