AI-Driven Productivity Gains Reshape Tech Hiring and Cause Job Insecurity

Discover how AI is transforming the tech landscape, causing layoffs, reshaping hiring strategies, and creating job insecurity as companies prioritise efficiency and high-skill roles.

Layoffs are shifting from cyclical triggers to a structural reset, as AI yields productivity gains with leaner teams, reshapes hiring, and pushes companies toward high-skill workforce models, according to TeamLease Digital CEO Neeti Sharma.

Repeated layoffs are increasing job insecurity, with over 60 per cent of tech workers reporting anxiety about stability, Sharma told PTI.

For companies layoffs are less about a financial squeeze and more about shifting to technology-driven scalability from labour-intensive models.

The comments come against the backdrop of instances of brutal downsizing in the technology industry over the past months, with some prominent tech giants including Oracle, Google and Meta slashing roles.

First-hand, emotional accounts of a cold, impersonal approach to retrenchments with '6 am email' culture - the dreaded, automated termination notice sent in the pre-dawn hours that deactivates employee badges before they can even log in, have sent shockwaves across the industry, fuelling anxiety among the tech workforce globally, and in India.

Data from tracking site Layoffs.fyi shows that more than 70 tech companies have shed a staggering 40,480 jobs globally, just this year.

"Layoffs are still largely cyclical, driven by post-pandemic over-hiring and slower global tech spending growth (about 5†6 per cent). However, AI is emerging as a structural factor," Sharma said.

Productivity gains to the extent of between 10†30 per cent have started becoming visible in tasks like coding and support, enabling leaner teams.

While AI isn't the primary driver just yet, it is accelerating a shift toward efficiency-led operating models, reducing the need for large, execution-heavy workforces, as per the TeamLease Digital top executive.

That said, AI is delivering measurable gains at a task level, just not yet at enterprise scale.

"Industry trends are showing 14†15 per cent productivity improvement in customer support and up to 40 per cent in select coding and writing tasks. However, most firms are still in early adoption stages, with limited evidence of revenue impact," Sharma noted.

Layoffs are partly funding these investments, reflecting a shift toward long-term capability building despite uncertain short-term returns.

This is a structural reset, she said.

AI-driven productivity gains (10†40 per cent in select tasks) are reducing routine roles while accelerating demand for specialised talent.

AI, data, and cybersecurity roles are seeing 18†27 per cent annual hiring growth in GCCs versus 4†6 per cent in IT services, alongside 25†60 per cent talent shortages.

"This is driving 10†12 per cent salary growth and premiums up to Rs 60 lakh for senior roles, fundamentally reshaping workforce structures toward high-skill, AI-led roles," Sharma said.

Job insecurity is rising due to repeated layoffs, with over 60 per cent of tech workers reporting anxiety about stability.

"This is happening alongside a deeper structural shift - legacy IT roles stagnating while digital roles surge, creating uneven opportunities," she said.

The result is heightened stress, especially among mid-skill workers facing obsolescence.

While severance is common, structured transition and reskilling support remain limited, amplifying the long-term social impact of disruption.

Strategic Capital Reallocation and the Role of Reskilling

Sharma pointed out that large tech firms are leading layoffs as part of strategic capital reallocation.

"Despite strong balance sheets, they are investing heavily in AI infrastructure, with spending running into tens of billions annually...Layoffs (for companies) are less about financial stress and more about shifting from labour-intensive models to technology-driven scalability," she added.

Sharma drew attention to the need for coordinated action to ensure an inclusive transition.

"In India, where millions of roles could evolve due to AI, reskilling is critical - yet less than 25 per cent of workers receive formal training today. Companies must invest in continuous learning and internal mobility, while policymakers should incentivise large-scale skilling initiatives," she said.

Workers need to go all out to adopt a skills-first mindset, she said adding the focus must shift from protecting jobs to enabling transitions into emerging roles.

Recent Layoff Examples

Oracle Corporation, last week, cut thousands of jobs globally - the largest single-day layoff in the tech sector in recent years - even as the enterprise software firm led by billionaire Chairman Larry Ellison, places historic bets on aggressive data center blueprint to power AI workloads for customers such as OpenAI.

The Austin, Texas headquartered cloud computing firm is believed to have laid off nearly 12,000 staff in India, while overall 30,000 staff were retrenched globally. According to its annual filing with the US Securities and Exchange Commission, the company had about 162,000 employees overall as of May 2025.

Earlier this year, fintech giant Block, which is led by storied entrepreneur and Twitter co-founder Jack Dorsey, announced layoffs of more than 4,000 employees, or nearly 40 per cent of its headcount. In a recently published essay coauthored with Sequoia partner Roelof Botha, Dorsey suggested that in the coming years, the role of the middle manager could be rendered obsolete.

Companies like Pinterest, CrowdStrike, and Chegg too have announced job cuts blaming AI adoption for broader organisational reset.