Artificial Intelligence earthquake…mass layoffs reshape Silicon Valley | technology

In the space of one week, in an event that the world did not expect to be of this magnitude nor to be carried out by these companies in particular, Meta and Microsoft shocked the markets with a massive layoff campaign that included more than 20,000 employees.

According to published reports about the wave of layoffs, it has been found that the total number of jobs lost in the technology sector has exceeded 50,000 jobs since the beginning of this year, with a close connection between these decisions and huge investments in artificial intelligence.

The global technology sector is currently witnessing a radical transformation described as a “structural earthquake.” While companies were racing to increase the number of their employees as evidence of growth, successive events indicate the dawn of a new era, which is the era of agile companies that rely on artificial intelligence as a backbone, which raises an existential question regarding this matter, which is, will artificial intelligence redistribute jobs in major global companies?

Comprehensive restructuring or the victory of artificial intelligence?

In light of the wave of layoffs, many voices have emerged accusing artificial intelligence of taking the place of employees who have been laid off, while some companies have indicated that they are working to restructure their employment environment, especially after the large hiring wave that accompanied the Corona pandemic and the urgent need at that time for new jobs and techniques for dealing with applications and programs that employees relied on from their homes to complete their job tasks.

This has contributed to an increase in the salary spending bill in these companies, in light of their inability to recover the amounts spent on the offered services provided by employees dismissed from their jobs.

But on the other hand, many observers and experts believe that companies are reducing the number of their employees not to reduce financial spending, but rather to pump it and invest it in the infrastructure for artificial intelligence. In the current labor market, total expenses are high, not just the salary bill.

In a study conducted this year by the American company Motion Recruitment, which is one of the largest companies specialized in recruitment solutions and talent search in the information technology sector, it was found that the adoption of artificial intelligence in large companies slows down hiring, specifically in entry-level jobs and general information technology roles, that is, the jobs that are most available to those who do not have specialized certificates, while creating a sharp and insatiable demand for artificial intelligence specialists.

In the same context, a number of experts who have previously worked in the field of artificial intelligence confirmed that this transformation is a structural and not a fundamental transformation, and therefore it cannot be considered a correction, even a temporary one, for the labor market, as the world is actually witnessing the beginning of a permanent transformation in how work is organized and implemented.

A poll conducted by the American website Resume among a thousand American hiring managers found that 55% expect layoffs in their companies during this year, and that 44% identify artificial intelligence as the main driver of these layoffs.

According to published data and reports, the wave of layoffs was not limited to large companies, but rather appeared in other companies, including:

• OracleIt recorded the largest number of layoffs of 30,000 employees, which constitutes 18% of its workforce, coinciding with the pumping of billions of dollars in investments in artificial intelligence infrastructure.

• Block Inc: The company reduced by 4,000 employees, with the aim of achieving a “flat company” model driven by algorithms.

• WiseTech GlobalIt laid off two thousand employees, representing 30% of its workforce, explicitly declaring that the time of “writing code manually” had passed.

• Atlassian: It laid off 1,600 employees, most of them in the research and development sectors, as a result of changing skills required in the age of artificial intelligence.

The most prominent jobs affected by the wave of layoffs

The number published by reports on the size of layoffs raised curiosity about the nature of jobs, as the layoffs were not random, but rather targeted specific job categories that artificial intelligence algorithms became able to compensate for, which are:

• Programming and junior engineersAccording to published reports, Snap has laid off a thousand employees, representing 16% of its workforce, coinciding with its announcement that artificial intelligence is now producing more than 65% of the company’s new code. This trend has affected many companies, as the need for junior programmers has diminished in favor of “smart agents”.

• Senior cadresIn an unprecedented move, Microsoft introduced “Voluntary Buyouts” offers to employees in the United States whose combined age and years of experience equal 70 years or more, with the aim of reducing senior and expensive management roles.

• Marketing and creativityIn the middle of this month, the American company Disney began a layoff campaign that included a thousand jobs across the marketing and television sectors, and studios such as Pixar and Marvel. Its CEO, Josh D’Amaro, said the goal is to create a “flexible, technologically enabled workforce” capable of keeping up with the speed of industry.

• Customer service and operationsReports from the American company Salesforce indicated that technical support jobs were replaced by systems based on digital agents, which led to the reduction of thousands of jobs in this sector.

Previous visions.. Will they come true?

Tech sector leaders shared on social media platforms, including expert discussions on Facebook, that the world is approaching a “tipping point,” where it has become possible for one person, armed with huge linguistic models and smart agents, to manage a company worth billions. Therefore, the system of large companies and the huge number of employees will no longer be possible.

It is estimated that one employee with multiple artificial intelligence tools can complete the jobs of several other employees, and thus companies will not need to worry about the monthly salary bill or the end-of-service bill, or even about the compensation bill that may be claimed when an employee is laid off.

Skills gap and talent costs

In parallel with the waves of layoffs, a sharp contradiction is emerging in the budgets of technology companies. While thousands of traditional employees are being laid off, a fierce talent war is igniting to attract elite artificial intelligence engineers and researchers. This shift has created a huge skills gap, as expertise in “intelligent agent architecture” and developing sovereign models has become the most expensive commodity in the market.

According to recent financial and technical reports, companies such as Meta have raised their spending expectations for this year to approximately $169 billion, not to increase the number of employees, but to cover the astronomical compensation required by these rare talents, which confirms the transition from the era of “intensive labor” to the era of the “ultra-expensive technical elite.”

Thus, experts believe that the world today is not experiencing the end of work, but rather the end of traditional work. The earthquake that is striking Silicon Valley today tells us that power is no longer the one who has the largest number of employees, but rather the one who has the “smartest” digital human operating system.