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Comment by avaer

6 days ago

Can't help but notice the trend of tech companies shaving employees at an accelerating pace.

Nobody wants to admit this (and there's a lot of reasons it could be temporary factors like "overhiring"), but to me this seems primarily if not exclusively driven by AI. You just can't say that to HR.

The bigger question is if this keeps accelerating, can the industry and broader economy handle so many jobs disappearing, so fast?

7 comments

avaer

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stego-tech  6 days ago

It's share price juicing, plain and simple. The evidence for AI displacement is thin, while the longer-term view of American enterprise is incredibly dim (the fact data sovereignty is now common vernacular as opposed to tinfoil-hat bullshit when I started discussing it almost a decade ago is anecdotal evidence enough to me, but just go look at EU/APAC spooling up their own clouds/services for more evidence), and those in power know that the business cycle is teetering on another, larger collapse after ~15 years of growth. It's all about getting that share price as high as possible to cash out before the downturn, and making a big to-do about handing over leadership to "the next generation" before the economy implodes.

Cynical? Yeah, but I fail to see evidence to the contrary yet.

> The bigger question is if this keeps accelerating, can the industry and broader economy handle so many jobs disappearing, so fast?

No, but smarter economies are already adapting. These companies make money through "butts in seats" licensing schemes, and their continuous layoffs and devaluing of labor in the face of constant price hikes are scaring businesses in other sectors into following suit with layoffs of their own. Eventually one or more of them will cross the trust thermocline (my money is on Microsoft), at which point numbers will collapse so fast that everyone else suffers for it as the larger economy panics. Think a bank run, but on XaaS licensing as companies downsize and cut their cloud bills, which in turn causes those companies to downsize, which slows economic engines in other tertiary industries, who then cut their headcount and licensing bills, etc, etc.

It's going to be a vicious cycle, but the thinking seems to be that doing this will depress the value of technical labor (some of the last highly-paid labor out there) between a glut of supply and AI offsetting some costs, with the assumption that consumers/workers will suck it up, cut back somehow, and make it work again.

Except that can't happen this time around. Fifty-odd years of American boom-bust cycles have left workers - especially younger workers - with nothing left to cut to survive. The cost of necessities is already unaffordable on current wages, and there's this expectation that we'll figure out how to cut down even further on our paychecks while still paying record prices for everything. The math doesn't work anymore, and so this downturn is going to hurt exponentially worse than the COVID, 2008, dotcom, S&L crisis, or stagflation turned out.

johnnyanmac  6 days ago

We're in a recession. We're not going to admit we're in a recession until it's over (or worse, until it goes on long enough to qualify as a depression), because that's how the powers that can call a recession work.

And no, we cannot handle it. Not without a major overhaul of policy, New Deal style. Will we get that? Who knows.

linkgoron  6 days ago

Microsoft hired a lot of people post-covid. Googling, they went from 125k employees in 2017, to 163k in 2020, to 221k in 2022, and have been mostly steady in size since then (latest number from 2025 is 228k).

How "temporary" is overhiring? I think that they could probably cut quite a bit from the company, and it might actually improve their output.

  • johnnyanmac  6 days ago

    They keep doing cuts but their employee count in 2025 is still higher than whenever we identify "overhiring" to have occured? Meanwhile, we know US hiring is on the downswing the past few years.

    Doesn't sound like a company that actually cares about "overhiring". More that where they hire is shifting.

  • Amhais  4 days ago

    There are a ton of passengers at Microsoft, and many sit in the middle of our unnecessarily bureaucratic processes. They would absolutely do well to trim down.

spwa4  6 days ago

It's driven by attempting to outinvest eachother in AI, which is very different. They're not replacing job functions by AI. They're dropping more and more stuff on the floor, abandoning it and using the money to invest in datacenters (ie. paying NVDA and a few others).

But they're not replacing these employees. That may come, in the future, but it's not what's happening. This is freeing up money at any cost to products.