Mass layoffs have misplaced their novelty in 2025, with main enterprises asserting sweeping job cuts on a rolling foundation all year long. Corporations throughout totally different sectors have been affected: Goal terminated 1,800 company roles in October, whereas UPS has now eradicated a complete of 48,000 positions this 12 months alone. However there is a new pattern shaping a number of these employment cuts, one that’s protecting CIOs on their toes: Persistently, it is AI that’s named as the explanation behind job elimination.
In a memo to workers, Amazon referred to the 14,000 layoffs it introduced this week as a part of “shifting sources to make sure we’re investing in our greatest bets.” Later, it referenced AI as “essentially the most transformative expertise we have seen because the Web.” At Salesforce, the corporate attributed its current layoffs of 4,000 workers partly to the advantages of AI. Even finance has joined in, with Goldman Sachs sharing its plans to cut back human roles the place AI replacements had been possible.
For CIOs, these layoff bulletins are an unavoidable signpost that AI goes to form employment technique for the foreseeable future — and it is the CIO’s duty to forge that path. However is that this a warning, a possibility, or perhaps a PR spin?
How Accountable Is AI for Layoffs?
Whereas AI could also be referenced as a constant contributor to current layoffs, not all consultants are satisfied that that is the sincere fact.
“Most claims that AI use is resulting in layoffs are largely overstated, given the present maturation of that expertise inside enterprises,” mentioned David Linthicum, a cloud and AI subject-matter skilled and former chief cloud technique officer at Deloitte Consulting. “Whereas there have been some productiveness features, it is to not the purpose the place the power to put off workers is on the stage we’re seeing.”
Reasonably than being a direct results of AI automation, Linthicum mentioned he views the layoffs as each a correction of earlier over-hiring within the post-pandemic interval and a response to the slowing of gross sales. The reference to AI may as an alternative be a option to put an optimistic spin on the information: Whereas layoffs may be a essential loss, they’re additionally paving the best way for higher efficiency. Lisa Palmer, CEO and chief AI strategist at Dr. Lisa AI, describes this phenomenon as “AI washing.”
“Corporations claiming that they’ve gained a lot productiveness from AI use that they’re shedding pointless workers — most often, that is PR spin,” she mentioned.
Ramesh Dontha, an AI skilled, creator, entrepreneur, and thought chief, agreed that attributing job cuts to AI is not the total image — particularly in relation to IT groups. He described AI as redefining, relatively than changing, IT. In each main layoff wave citing AI, the pattern is not that tech groups are being gutted, he mentioned; it is that IT is turning into extra strategic and fewer operational.
“The true shift is from upkeep to mannequin administration — from fixing methods to coaching them,” Dontha mentioned.
Whereas AI’s duty is debatable, there are two issues everybody agrees on: AI is the first space of focus going ahead, and it’ll change what jobs appear to be.
Main IT Groups within the AI Period
For CIOs, the general public emphasis on AI is a double-edged sword. Whereas it might appear to be the IT division has been elevated when it comes to firm worth, it’s not impervious to staffing modifications and even job cuts.
“Many assume IT is protected as a result of it is the implementer of AI — it isn’t,” mentioned Wendy Turner-Williams, founder and government managing director of TheAssociation-AI.org, and strategic advisor for information and AI on the College of Maryland World Campus. “The identical automation that IT deploys throughout the enterprise is being aimed proper again at its personal operations: incident response, QA, service tickets, documentation, even coding.”
Turner-Williams and Dontha each spoke of the vulnerability of IT groups to automation if they don’t seem to be purposefully redirected towards new methods of working. Linthicum was extra optimistic about IT groups’ safety, arguing that they’re going to be wanted to realize the lofty AI targets that firms are articulating. Nonetheless, this protected class standing could also be solely non permanent till the AI options have been developed and launched.
CIOs could also be tempted to try to shield their groups from future layoffs — and this can be a noble aim — however Dontha and others warn that this focus is the mistaken strategy to the largest query of working within the AI age.
“Defending individuals from AI is not the reply; getting ready them for AI is,” Dontha mentioned. “The CIO’s job is to redeploy human expertise towards high-value work, not protect yesterday’s org chart.”
For Palmer, it’s crucial that CIOs not get distracted by preserving the established order. Whereas it might be tempting to dig of their heels and take the most secure route by means of the AI quagmire, this is not going to reap the rewards they should truly AI-proof their group. She mentioned she sees workers at each stage, from frontline to C-suite, as in danger if they do not actively adapt, upskill, and transfer quick.
“Many CIOs have created AI insurance policies, constructed AI governance groups, even launched pilots,” Palmer mentioned. “That is all extraordinarily low-risk, essential work. It is also a good distance from creating worth for his or her companies. That’s what places leaders and their groups prone to downsizing or alternative.”
CIOs Beneath Higher AI Stress
When an organization describes its layoffs as a part of a redistribution of sources into AI, it shines a highlight on its future AI efficiency. CIOs had been already feeling the strain to search out productiveness features and value financial savings by means of AI instruments, however the stakes are actually increased — and really public.
“When AI is cited as the explanation for layoffs, the CIO inherits the clock,” Turner-Williams mentioned. “Boards and CEOs will anticipate seen ROI, and quick.”
Unsurprisingly, this strain typically results in unproductive outcomes. In accordance with Turner-Williams, it is not uncommon for strain to drive a surge in proofs of idea that focus narrowly on price takeout, relatively than sustainable worth creation. “However speeding ROI not often builds it,” she added.
It is not simply CIOs on the firms affected that could be feeling this strain. A number of trade consultants described these layoffs as signposts for different organizations: That AI technique wants an overhaul, and that there’s a new operational mannequin to check, with fewer layers, quicker cycles, and extra automation within the center. Whereas they could possibly be interpreted as warning indicators, Turner-Williams burdened that this is not a time to panic.
As a substitute, CIOs ought to use this as a possibility to get proactive. She acknowledged that when hyper-scalers restructure, midmarket and enterprise CIOs typically really feel pressured to comply with go well with, to show larger effectivity to the board.
“However imitation is not transformation,” she warned. “The smarter response is to pause, not panic. Do not copy the symptom, research the sign. AI does not remove jobs; unhealthy AI technique does.”
After Layoffs, Now What?
There isn’t any one-size-fits-all strategy to AI technique, however trade consultants are notably break up on what motion ought to appear to be in response to a mass layoff, whether or not it happens internally or at an trade counterpart.
Dontha spoke of a number of ways in which CIOs can earn some goodwill from the remainder of the chief group by means of early AI wins. Some boards will anticipate leads to 90-180 days, whether or not that appears like quicker deployments, tangible price financial savings, or shorter incident response instances. For IT leaders dealing with these calls for, he really helpful copilot-assisted service desks to chop decision time by 25% to 30%; AI code assistants to spice up developer throughput by 15% to twenty%; and cloud FinOps AI to cut back inference prices by as much as 40%.
Palmer was much less prescriptive however nonetheless adamant about the necessity to take motion. “Too many leaders are defending their titles as an alternative of defending their firms, paralyzed by the concern of doing one thing dangerous relatively than the implications of doing nothing,” she mentioned. “[But] rivals aren’t ready.”
She advocated for clear, considerate motion that is led by braveness, relatively than concern. Reasonably than specializing in the potential fallout of an ineffective AI push, she argued that inaction is the largest danger of all.
On the alternative aspect, Linthicum suggested leaders to withstand the push to search out fast wins. He noticed that, for all of the expectations and pleasure round AI’s impression, ROI remains to be fairly elusive in relation to AI initiatives. To truly see success, CIOs will certainly must dedicate extra sources to their AI packages, however he mentioned he believes the sense of urgency created by these layoffs is “largely misplaced.”
“I’d concentrate on their very own wants and transfer to AI, or some other expertise, when it is sensible for them,” he mentioned. “Do not comply with the group.”
Suggesting a method considerably in between these two stances, Turner-Williams mentioned she believes profitable CIOs would be the ones who can work alongside two separate timelines: the AI initiatives that may have measurable impression in 90 days, and those that may rework operations over 18 months. She agreed with Dontha’s short-term options, saying that these early features will come from improved operation effectivity, however she added the significance of pursuing a bolder reinvention technique alongside.
Finally, Turner-Williams mentioned, “AI is not only a expertise funding — it is a management stress take a look at.”
