Meta AI layoffs sign hottest tech career may be more risk than riches

Accenture announced in August that it would lay off about 13% of its employees around the same time it announced it was investing in data tagging startup Snorkel AI to power its financial services clients.

He wasn’t alone.

When Meta When it bought a large stake in Scale AI in June, the deal was billed as a sign of confidence in the fast-growing data labeling company. This was also the catalyst that resulted in the layoff of 14% of its staff. Coding AI startup Windsurf has made a buyout offer to all of its employees following a failed attempt to acquire OpenAI. After Cognition acquired the company, it laid off 30 people and made a buyout offer. According to information. HPIts acquisition of AI pin company Humane led to a 30% to 70% pay increase for some employees, according to the report. techcrunch – and immediate layoffs for others.

The trend is not slowing down either.

On Wednesday, Meta laid off 600 employees in its AI unit, and Meta’s Director of AI (and Scale AI founder) Alexandr Wang announced the layoffs in a memo to staff.

While large tech companies are doubling down on AI by acquiring or investing in agile startups, the workforces of these smaller companies are often the first to feel the impact. As Wall Street puts the spotlight on investments, it quickly turns into eliminating duplicate functions rather than preserving the startup culture and keeping employees happy.

“In the past, there were more concessions to culture, continuity and those kinds of things,” said JP Gownder, Forrester vice president and principal analyst. “That’s not exactly the situation we’re in. Big Tech’s goal is to minimize understaffing for a variety of reasons.”

Accenture, Meta, Cognition and HP did not respond to requests for comment.

While job losses after mergers are nothing new, the way tech giants are handling these AI-powered acquisitions feels different. Part of that disruption stems from big tech companies still retooling their workforces after years of pandemic-era hiring.

“As these large technology companies continue to pivot toward growth, and that growth is often driven by artificial intelligence, they will divest, terminate, or restructure lower growth or non-core assets,” said Malinda Gentry, Americas Technology, Media and Telecommunications (TMT) industry leader at EY-Parthenon. “This will result in less need for that workforce or the creation of a more organized and productive workforce.”

“What you’re seeing right now and the adjustments you’re seeing in the workforce are driven by the rapid pace of AI,” Gentry said.

Early exits and career endings

The World Economic Forum estimates that AI could eliminate 80 to 85 million jobs and create as many as 170 million new jobs worldwide over the next three years. As the industry shifts towards a more AI-enabled workforce, the challenge for tech workers is to find a place in between. Start-ups in the industry offer flashy offers and opportunities for future career advancement, but the fact that many of these companies view exits as the end game also creates volatility in the business.

Startups are less likely to be maintained as independent units and more likely to be incorporated into big tech’s existing operations. This is occurring in a labor market where job seekers have already lost the “job-hopping” advantage of the Covid era.

“When you buy a company, if you get rid of the people in the company (unless you’re buying the company just for the intellectual property or the customer), you generally don’t want to get rid of the talent,” Forrester’s Gownder said. “But it’s such an employer market right now, what are people going to do?”

The pace of artificial intelligence development is another cause of workforce loss. The shift towards AI has caused many tech companies to not only bet that they won’t need entry-level jobs, but also to rethink their company’s employee structure and place a greater emphasis on senior roles.

“They are moving towards a flatter organizational model where they are getting rid of layers of middle management,” Gownder said. “So most layoffs happen at the middle management layer. There’s an argument that technology, such as collaboration technology and very clear product development lifecycles, eliminates the need for extra layers of management.”

Startups were dangling the carrot for employees about being able to expand with new technology and reap the benefits of being acquired by a larger giant. However, many employees now see this as a risk. Uncertainty could change the way AI startups recruit. As workers become wary of being left behind in a deal, contracts may begin to include stronger guarantees of equity or severance pay in the event of a buyout.

“The implication of this ‘buyout and elimination of staff’ is a bit troubling,” Gownder said. “It may be a little harder for some of these startups to hire the talent they want if the talent they want is hoping to get a share of that spoils.”

Despite the turbulence, experts emphasize that layoffs do not tell the whole story. With every downsizing announcement, there are also recruitment moves in areas related to artificial intelligence strategy. Big tech is still racing to secure scarce talent in machine learning, data science and AI security. There is no turning back from the future of the AI-powered technology workforce.

“There will continue to be a trend of workforce reductions,” Gentry said. “But this is balanced by the ability to continue to grow and acquire talent, whether that’s hiring, acquiring, or partnering in the ecosystem.”