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Another one bites the dust. Or should I say, another several thousand.
Cisco has become the latest in a string of big tech companies to announce major layoffs to the workforce, including a shift to AI among the reasons for the cull.
Executives announced the tech giant plans to trim 7% of its workforce. No specific numbers were given, but with a workforce reportedly sitting at around 85,000 employees as of July 2023 (and following a 5% headcount reduction in February), well over 5,000 workers are set to be affected.
Those managing to keep up to date with tech industry layoffs would be forgiven for feeling like Bill Murray’s Phil in Groundhog Day—only with less stepping in puddles and gradual romancing of Andie MacDowell, and more platitudes about ‘growth’ or a ‘winning’ strategy.
“As we look to build on our performance, we remain laser focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns,” said Scott Herren, Cisco’s CFO, in a statement.
Why are Cisco, Intel, and laying off staff as they push to AI?
Sounds familiar, right?
Last week, Dell executives informed staff in a memo that the company would be making 12,500 layoffs, emphasizing a major change to its sales unit, creating an “AI select sales team” as the company capitalizes on the fast-moving “world of AI.”
The week before that, Intel CEO Pat Gelsinger wrote to employees announcing 15,000 layoffs. “This is painful news for me to share. I know it will be even more difficult for you to read,” he wrote. “Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI.”
And back in June there was Microsoft. The company publicly maintained the same boilerplate statement they’ve shared in each instance of a series of layoffs since January 2023: “Organizational and workforce adjustments are a necessary and regular part of managing our business. We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners."
However, a leaked memo from an EVP affected by the layoffs attributed the layoffs to greater investment by Microsoft in artificial intelligence (AI).
Usually accompanied by some reference to the need for greater operational efficiency and cost reduction, AI-related layoffs have swept across corporate America, particularly in industries like tech that have the market pressure and cultural readiness to embrace automation and or generative AI.
Workers worry they will be replaced, not reskilled –they’re right to do so
EY research at the end of 2023 demonstrated how deeply felt worker concerns about job security amid AI adoption truly are. 75% of employees said they were concerned AI would make certain jobs obsolete and 65% said they were anxious about AI replacing their jobs.
Their concerns are well-founded. Cisco, Intel, Microsoft, and the other tech giants of the world will dominate headlines, but this issue is felt across all industries and company sizes. A recent report from ResumeBuilder found that 37% of business leaders who used AI in 2023 said it replaced workers.
So, for any given workforce that makes a concerted effort to invest in AI, there’s roughly a one-in-three chance that jobs at their company are on the line.
Workers are right to be worried because the bottom line for most employers is that AI gives their company the chance to get automatable, time-intensive processes completed in a fraction of the time and for a fraction of the cost. Microsoft, for example, says its HR Virtual Agent saved 160,000 hours for HR service advisors by answering routine questions.
Plenty of HR leaders have tried to reassure their workforce (and themselves) by claiming that AI is there to support, not replace, employees; that a bot won’t take their job, but certain administrative tasks that could free up time for more valuable work.
Unfortunately, that only applies where employers are happy to invest time, money, and resources in reskilling employees whose roles are ripe for automation.
That could be through AI-centric retraining. eBay’s CTO Mazen Rawashdeh, for example, recently told Fortune that he focuses less on the efficiency gains from eBay’s in-house generative AI tools and more on career development opportunities and upskilling junior and mid-level engineers on his team.
But for many workers losing (parts of) their jobs to AI who do not wish to retrain in AI-specific skills – yes, not every employee wants to become a prompt engineering expert! – employers should also consider other opportunities for reskilling into a role that is meaningful, engaging, and motivating for the employee.
