957 Employees Laid Off Per Day: 2024 Starts Bitterly For Job-Seekers, Will You Lose Your IT Job To AI?

Over 900 tech employees lost their jobs per day from January 1st to 23, 2024. The new year kick-started bitterly for job seekers, looking to land a position in one of the largest renowned recruiters, IT companies. However, it could not have been bad timing, especially with big techs like Amazon, TikTok, HP, and Google firing thousands. Even the latest data of Q3 showed that Indian IT players like TCS, Infosys and Wipro also recorded massive declines in headcounts.

It is a scary world for freshers or job seekers when the sector you're aiming to work for a better future, is carrying layoffs in thousands.

Data from Layoffs.fyi showed that 63 tech companies have laid off at least 10,963 employees in January month so far.

Meanwhile, another layoffs tracker report by trueup.io showed that so far in 2024, there have been 133 layoffs at tech companies with 22,016 people impacted. The tracker revealed that up till today, in January, 957 people lost their jobs per day in the technology segment.

Further, trueup's data revealed the latest layoffs are carried by Riot Games, reel giant TikTok, search engine behemoth Google, Xendit, Verint, Amazon and Nexon among others.

The latest layoffs have escalated due to uncertainties in macro conditions especially the BFSI and CMT segment which still faces pressure in the North American market.

Trueup data further highlighted that January 2024 saw a pickup in layoffs compared to total job cuts of 16,945 and 16,875 in December and November of 2023.

Moreover, the layoffs.fyi data pointed out that the biggest tech layoffs since COVID-19 were done by Meta formerly known as Facebook (total 22000 job cuts), Amazon (19,000 job cuts), Google (12,000 job cuts), and Microsoft (10,000 job cuts) and of it took place in 2023.

Another reason for job cuts could also be the adoption of artificial intelligence (AI)-generative services. In December 2023 it was known that leading AI-giant Nvidia dominates the data centre GPU segment with 92% market share, while Microsoft along OpenAI together hold 69% in the foundational models and platforms market. Moreover, Accenture has emerged as a leader in the services market with a 6% share.

Indian tech companies have also seen a significant drop in employee count. In Q3FY24, Azim Premji-backed Wipro recorded a decline of 4,473 employees in headcount, while TCS headcount slipped by 5,680 employees, and Infosys witnessed a decline of 6,101 employees.

Between October to December 2023, the three Indian IT giants let go of 16,254 employees.

As of December 31, 2023, Wipro's headcount stood at 240,234 employees, Infosys at 322,663 employees, while Tata Group-backed flagship TCS who is the largest recruiter in the Indian IT sector, has a total headcount of 603,305 employees.

Apart from this, the Challenger, Gray, & Christmas, Inc.'s latest report said that in 2023, companies planned 721,677 job cuts, a 98% increase from the 363,824 cuts announced in 2022. It is the highest annual total since 2020 when 2,304,755 cuts were recorded. With the exception of 2020, it is the highest total since 2009, when 1,288,030 job cuts were announced.

Notably, as per the report, technology-led all industries in job cut announcements last year with 168,032, up 73% from the 97,171 cuts announced in 2022.

More job cuts ahead!

Also, the Challenger report mentioned that in the fourth quarter of 2023, companies announced plans to cut 117,163 jobs, down 20% from the 146,305 cuts announced in the third quarter of the year. It is down 24% from the 154,329 cuts which occurred in the final quarter of 2022.

Andy Challenger, workplace and labor expert and Senior Vice President of Challenger, Gray & Christmas, Inc. said, "Layoffs have begun to level off, and hiring has remained steady as we end 2023. That said, labour costs are high. Employers are still extremely cautious and in cost-cutting mode heading into 2024, so the hiring process will likely slow for many job seekers and cuts will continue in Q1, though at a slower pace."

Challenger added, "The Tech sector will continue to be impacted by the onset of AI, mergers and acquisitions, and realigning of resources and talent."

AI adoption is likely to be a crucial factor in the growth of the IT sector ahead.

In its research note, Kotak Institutional Equities said, "Enterprise adoption of generative AI will lead to large system integration opportunity. ISG estimates US$175 bn in additional service opportunities annually by 2030. Generative AI work will be largely project-based in 2024 and will gradually grow over time."

Popular use cases of generative AI are (1) employee engagement using ChatGPT like chatbots, (2) extracting information from and summarizing documents, (3) synthetic data generation and content creation and (4) automated coding and testing. Enterprises are experimenting with both predictive and generative AI. These will scale up over the next few years, as per the brokerage.

"Enterprises have increased expectations from providers regarding productivity. ISG expects significant improvements in productivity in 2024 on both ITO and BPO contracts. Pricing can be impacted due to productivity that providers will bring to the table, especially in areas such as app modernization and call center," Kotak's note lastly added.

It will be keenly watched how AI adoption will unfold on tech employees.