Top CEO Reveals What’s Causing Layoff Frenzy

This past week, IT businesses laid off more than 4,000 workers, citing the need to increase efficiency in the age of artificial intelligence as the main reason. After acquiring Splunk, Cisco (NASDAQ: CSCO) slashed 4,250 jobs, or 5% of its employees, in anticipation of lower demand and economic instability.

In 2024, X needed to lay off again, as did Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), and others. Twitch and Amazon’s film division both laid off employees. Google Assistant and other Google projects were among those that were cut. X made additional cuts to its trust and safety team.

These steps align with the continuous effort to reduce costs and prioritize projects.

Many blame the rise of AI, but Mark Zuckerberg, CEO of Meta, has said that a different reason causes the tech sector layoffs.

It all began when businesses tried to profit from the COVID-19 pandemic’s e-commerce surge. Companies are now seeing that they can run more efficiently with fewer employees, Zuckerberg said.

When online sales began to skyrocket during the pandemic, Zuckerberg expressed uncertainty about the sustainability of the trend. He maintained that businesses were overbuilt. Among them was Meta.

After investing heavily during the e-commerce boom in 2022, Zuckerberg said in November that the firm was cutting over 11,000 jobs to become leaner. Last April, the corporation laid off an additional 10,000 workers.

However, layoffs occurred at Meta and other large tech companies during the last year. Many of these businesses, including Alphabet, Amazon, and Microsoft, claimed to have overhired.

Zuckerberg spoke to hosts Neal Freyman and Toby Howell of the Morning Brew Daily podcast, saying he thinks many companies realized they were not in a good financial place because they overbuilt.”

He believes that many businesses across the economy did so, and then when conditions returned to almost identical levels as before, they saw the predicament they built for themselves.

Tech, media, and Wall Street employees feel the effects.