What's happened
IBM plans to lay off about 2,700 workers, impacting less than 1% of its global workforce, as it shifts focus toward AI and cloud computing. The move follows recent layoffs at other US tech giants, amid concerns over AI-driven automation replacing jobs, especially for young workers.
What's behind the headline?
IBM's layoffs highlight a broader trend of automation and AI transforming the US job market. While the company’s focus on AI and cloud computing is boosting revenues—Q3 sales rose 9% to $16.33 billion—the impact on employment is significant. The layoffs, affecting a low single-digit percentage of staff, are part of a strategic realignment to meet demand for AI services. However, these cuts disproportionately affect roles involving routine data entry and entry-level positions, which are crucial for young workers, especially Gen Z. The Stanford report underscores a 13% decline in job postings for young adults in AI-exposed industries since 2022, coinciding with the launch of ChatGPT and the AI race among US firms. Major companies like Amazon, UPS, and Target are also reducing jobs, partly driven by automation efforts. Experts warn that AI could eliminate nearly 100 million jobs over the next decade, though some roles in healthcare and software engineering may grow. The current wave of layoffs signals a significant shift in employment patterns, with automation replacing many traditional roles, especially those appealing to entry-level workers. This trend will likely accelerate, prompting young workers to pivot toward more resilient industries like healthcare, which offers stable, entry-level opportunities with low barriers to entry.
What the papers say
The New York Times reports IBM's planned layoffs affecting less than 1% of its workforce, emphasizing the company's strategic shift towards AI and cloud computing. The NY Post highlights the broader impact of AI on young workers, noting a 13% drop in job postings for 22-25-year-olds in AI-related sectors since 2022, and discusses layoffs at Amazon, UPS, and Target. Business Insider UK features insights from ServiceNow CEO Bill McDermott, who describes AI as a 'breakthrough' that will reshape the economy, leading to both job creation and displacement, especially in software and support roles. The contrasting perspectives reveal a complex picture: while some see AI as a driver of economic growth and innovation, others warn of significant job losses, particularly for entry-level and routine positions, with implications for young workers and the broader labor market.
How we got here
IBM has been rebalancing its workforce for years, shedding some roles while expanding in high-growth areas like AI and cloud computing. Under CEO Arvind Krishna, the company spun off its traditional tech services business, Kyndryl, to focus on AI-driven enterprise solutions. The recent layoffs reflect this strategic shift amid rising AI adoption and investment.
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Amazon.com, Inc., is an American multinational technology company based in Seattle, Washington. Amazon focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence.