Tech CEOs say AI is driving mass layoffs. Experts say that's only half the story

If you read the typical 2025 mass layoff notice from a tech industry CEO, you might think that artificial intelligence (AI) cost workers their jobs.

The reality is more complicated, with companies trying to signal that they’re making themselves more efficient as they prepare for broader changes wrought by AI.

Tech job postings are down 36 per cent from 2020, according to a new report from the job listing site Indeed. But that isn't only because companies want to replace workers with artificial intelligence (AI).

A new report from career website Indeed says tech job postings in July were down 36 per cent from their early 2020 levels, with AI representing only one factor in stalling a rebound.

ChatGPT’s debut in 2022, for example, also corresponded with the end of a pandemic-era hiring binge.

“We’re kind of in this period where the tech job market is weak, but other areas of the job market have also cooled at a similar pace,” said Brendon Bernard, an economist at the Indeed Hiring Lab.

“Tech job postings have actually evolved pretty similarly to the rest of the economy, including relative to job postings where there really isn’t that much exposure to AI".

That nuance is not always clear from the last six months of tech layoff emails, which often include a nod to AI in addition to expressions of sympathy.

Workday CEO Carl Eschenbach, for example, said in an email announcing mass layoffs earlier this year that "companies everywehre are reimagining how work gets done," citing the "increasing demand" for AI at his company as the reason behind the layoffs.

The same rhetoric is being used internationally, for example by India's tech giant Tata Consultancy, which justified the 12,000 cuts to its organisation by saying that it is getting ready to deploy "AI at scale for our clients and ourselves".

AI spending is a more common factor

What's more common than AI replacing jobs, though, is the need for more dollars to implement AI throughout the company, experts said.

Tech companies are trying to justify huge amounts of spending to pay for data centres, chips, and the energy needed to build AI systems.

Bryan Hayes, a strategist at Zacks Investment Research, said there is a "double-edged sword," of restructuring in the AI age. Companies are trying to "find the right balance between maintaining an appropriate headcount but also allowing artificial intelligence to come to the forefront".

Hayes said broader tech layoffs have helped improve profit margins, but what it means for the employment prospects of these workers is hard to gauge.

“Will AI replace some of these jobs? Absolutely,” said Hayes. “But it’s also going to create a lot of jobs".

Those tech employees that are able to show that they can "leverage artificial intelligence and help the companies innovate and create new products and services, are going to be the ones that are in high demand," he added.

Hayes pointed to Meta Platforms, the parent company of Facebook and Instagram, which is on a spree of offering lucrative packages to recruit elite AI scientists from competitors such as OpenAI.

The Indeed report shows that AI specialists are faring better than software engineers, but postings for those jobs have also gone down.

Bernard said that is because of the "cyclical ups and downs of the sector".

Entry-level jobs most affected

The Indeed report found that AI is having the deepest impact on entry-level jobs across sectors, including marketing, administrative assistance, and human resources.

That's because those jobs have tasks that overlap with generative AI tools.

Postings for workers with at least five years of experience fared better, the report found.

“The plunge in tech hiring started before the new AI age, but the shifting experience requirements is something that happened a bit more recently,” Bernard said.

On the other end of the spectrum, some types of jobs appeared more immune to AI changes. That included health workers who draw blood, followed by nursing assistants, workers who remove hazardous materials, painters, and embalmers.