Big Tech jobs are on the line after Google, IBM, and Dropbox say they're leaning into AI

Sat, 05/06/2023 - 07:00

Drew Houston, CEO of Dropbox. — Drew Houston, CEO of Dropbox, cited the "expansion" of AI products in layoff memo to staff in April.
Matt Winkelmeyer / Getty Images

A number of corporations across tech, media, and finance have made major staff cuts this year.
At the same, many companies are pivoting to invest more in AI — some even citing it as a reason for cutting jobs.
Here are how some major companies are pivoting — and axing jobs — as part of an AI push.

Many major corporations have made significant cuts to their workforces this year as the rough market conditions that began in 2022 have continued.

Some companies have justified these layoffs by pointing to a renewed focus on efficiency and staying lean, thereby putting an end to the pandemic hiring boom and era of "fake work."

Others have noted that they're redirecting to focus on business sectors with more potential.

Among them, a handful of companies including Meta, Google, and Dropbox have specifically pointed to a new — or renewed — focus on artificial intelligence in their layoff memos to staff.

Mark Muro, a senior fellow at the Brookings Institute who studies the impact of AI on the economy, believes that some companies may simply be using the AI argument right now as an excuse to cull their ranks.

"Many firms got way out over their skis with over hiring in the first year of the pandemic," he said. "The AI explosion may be a convenient explanation for ordinary mismanagement."

A pivot to AI could eventually mean these companies have bulked-up teams working on AI products or a greater need for machine learning engineers or natural language processing experts. The money to hire those people has to come from other departments.

"Our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development," Dropbox CEO Drew Houston said in his message to staff announcing layoffs.

At the same time, the focus on AI could mean some jobs are wiped out entirely. It's hard to ignore that AI tools have already become proficient at several professional tasks that once fell under the domain of humans like writing emails, analyzing data, and even coding.

Muro agrees that for some businesses, the application of large language models like ChatGPT or GPT-4 could have a "material impact" on day-to-day operations.

The CEO of the avatar tools startup Genies, for example, recently purchased ChatGPT for all of his employees to streamline the company's workflow.

That's why Muro thinks a healthy dose of paranoia might be valuable for everyone right now.

"I think every worker needs to ask themselves what are they bringing to their work and what do they do that is irreplaceable?" Muro said. "That question is getting harder to answer now."

Here are a list of companies that have cited AI in announcements regarding layoffs and hiring freezes.

Buzzfeed

Jonah Peretti, CEO of Buzzfeed, said the company would "bring AI enhancements to every aspect of our sales process" after announcing a 15% staff cut.
Lucy Nicholson/Reuters

In late April, Buzzfeed announced that it was cutting 15% of its staff and shuttering its news division entirely.

The news came just months after the company announced it would be using AI to generate stories — a decision which was initially followed by a 200% surge in the company's stock price.

In a memo to staff announcing the layoffs, CEO Jonah Peretti noted that the company would be "beginning to bring AI enhancements to every aspect of our sales process," in addition to "reducing layers" of the business organization.

Later in the memo, Peretti noted that the company will "work together to run a more agile and focused business organization," which would include bringing "more innovation to clients in the form of creators, AI, and cultural moments."

Dropbox

In late April, cloud storage firm Dropbox announced that it would be cutting 500 jobs or about 16% of its global workforce.

In a memo to staff Dropbox's CEO Drew Houston noted that the cuts were being made, in part, so the company can focus on expanding AI products.

"The AI era of computing has finally arrived. We've believed for many years that AI will give us new superpowers and completely transform knowledge work," Houston wrote. "And we've been building towards this future for a long time, as this year's product pipeline will demonstrate."

Google

In late January, Google's CEO Sundar Pichai announced that the company would be slashing 12,000 jobs or around 6% of its corporate workforce after over-hiring for the past two years.

Pichai did not provide specifics on the departments that would be affected, but noted that the cuts would impact the company across product areas, functions, levels, and regions.

Despite the "tough choices" the company was forced to make, Pichai contended that, due in part to its early investments in AI, the company still had a huge opportunity for growth.

"We're getting ready to share some entirely new experiences for users, developers and businesses, too," he wrote. "We have a substantial opportunity in front of us with AI across our products and are prepared to approach it boldly and responsibly."

IBM

On Monday, IBM CEO Arvind Krishna said the company expects to pause hiring for roles that could be replaced by AI.

These include roles in areas like human resources and other non-consumer-facing departments that currently amount to 26,000 jobs.

"I could easily see 30% of that getting replaced by AI and automation over a five-year period." Krishna told Bloomberg, or about 7,800 jobs.

In a statement to Insider, an IBM spokesperson clarified that "there is no blanket hiring 'pause' in place."

"IBM is being deliberate and thoughtful in our hiring with a focus on revenue-generating roles, and we're being very selective when filling jobs that don't directly touch our clients or technology," they said, adding that the company is still hiring for thousands of positions.