The Era of "Eternal Layoffs" — Experts Explain New Strategy in IT Sector

Last week, Microsoft announced the layoff of approximately 4,800 employees. This marked another round of cuts at the company, which continues to make a profit and invest tens of billions of dollars in AI infrastructure.

Amazon, Meta, Cloudflare, and Cisco are using a similar strategy. In May, Cloudflare cut over 20% of its staff despite business growth of over 30%. Cisco reported record quarterly revenue, then announced the layoff of almost 5% of its workforce.

Companies are increasingly linking staffing decisions to technological developments. According to AlphaSense data, in 2022, AI and layoffs were mentioned simultaneously in fewer than five corporate conference calls per quarter. In 2026, this figure exceeded 100.

However, employers usually deny a direct link between specific cuts and AI implementation. Microsoft stated that the latest round of layoffs is not related to the technology. Amazon also claims that AI was not the reason for most of the cuts made over the past two years.

Harvard Business School Professor Joseph Fuller believes that companies are moving towards "constant workforce adjustment." Instead of one large layoff during a crisis, they will regularly review teams and dismiss employees in line with changing priorities.

One reason for this is the uncertainty surrounding AI. Executives do not yet know which tasks can be automated and how many employees will be needed in the future. At the same time, they fear that competitors will implement the technology faster and gain an advantage.

Most large companies have not yet reached a level of automation that would allow them to operate with a significantly smaller workforce, noted Andela platform head Carol Chang. According to her, employers are trying to demonstrate productivity growth through AI without increasing costs. However, specialists capable of effectively using new tools are few and expensive to hire.

Some companies are already bringing employees back to positions that were previously eliminated in anticipation of automation. The repetitive cycle of layoffs and hiring increases costs for compensation, recruitment, training, and external contractors.

Regular cuts also create constant uncertainty for employees. According to Stanford University Professor Jeffrey Pfeffer, companies risk losing their strongest employees, internal connections, and accumulated business knowledge because of this.

Experts warn that as AI spreads, the value of employees who thoroughly understand processes, customers, competitors, and industry specifics may only increase. Therefore, constant staff reductions could worsen company performance instead of the expected increase in efficiency.

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