Is AI Driving Tech Layoffs? Why the Real Picture Is More Complex | Explained

In 2025, many tech layoffs were accompanied by a familiar message: Artificial Intelligence (AI) is changing work, and companies must change course. CEOs at Autodesk, CrowdStrike, Workday, Microsoft, and Recruit Holdings (Indeed and Glassdoor) all pointed to AI investments as reasons behind massive job cuts this year. While Autodesk CEO Andrew Anagnost underlined that layoffs were needed to “accelerate investments“ in AI, Indeed‘s parent Recruit reportedly said, “AI is changing the world, and we must adapt“ after announcing 1,300 job cuts, an estimated sex percent of the company’s HR tech workforce, according to a recent report published by The Financial Express.

Layoff Emails vs. Hiring Trends

However, job market data reports paint a different picture. An Indeed Hiring Lab report cited by AP showed tech job postings in July 2025 were down 36% as compared to early 2020, and yet mirrored job cooling across sectors. 

Economist Brendon Bernard told The Associated Press, “Tech job postings have actually evolved pretty similarly to the rest of the economy.”

Meanwhile, Recruit Holdings is integrating Glassdoor into Indeed, with reported leadership shakeups including Glassdoor‘s CEO stepping down, in a sign the current wave of layoffs could possibly be on account of organizational shifts, and not just AI crowding out jobs, as reported by The Financial Express.

Hiring Pressures Hit Entry-Level Especially Hard

Data shows the steepest declines in entry-level tech role, especially marketing, HR, and admin jobs — functions that overlap with generative AI tasks. “The plunge in tech hiring started before the new AI age, but the shifting experience requirements is something that happened a bit more recently,” Ap quoted Bernard as saying.

Meanwhile, demand for AI specialists like machine-learning engineers remains above pre-pandemic levels, though below their 2022 peak, the AP report stated.

Big Spending & Profit Pressures Are Part of the Story

Big tech firms are still posting massive profits and investing heavily in AI infrastructure. Microsoft, despite laying off around 15,000 workers this year, reported soaring profits and doubled down on AI spending. CEO Satya Nadella acknowledged the irony, calling layoffs “the enigma of success” in AI transformation, CNBC reported last week.

This contrast – layoffs coinciding with rising expenses on data centers and chips – appears to suggest that firms are trimming workforce costs to possibly fund AI expansion and to reassure investors.

AI Is Key, But Not Sole Culprit

AI is seemingly reshaping tech labor – entering routine work, shifting recruiting toward experienced hires, and boosting demand in certain areas, the report said, adding that widespread job cuts also reflect earlier over-hiring post-pandemic, economic uncertainty, and pressure to cut costs and fund capital-intensive AI builds.

Reports suggest entry-level jobs are suffering the most, but experienced AI talent remains in demand. “AI flattens our hiring curve, and helps us innovate from idea to product faster,” Bryan Hayes of Zacks Investment Research said, per AP.