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Redefining the Workforce: How AI Investment is Reshaping Jobs in Big Tech

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AI Threatens Major Tech Positions, But Not As Expected

On June 3, Aaron Damigos received an alarming and all-too-common calendar invitation for a business update meeting. This meeting, attended by HR, his manager, and senior executives, unexpectedly concluded his role as a web support associate at Microsoft.

In early June, it was reported that Microsoft had dismissed around 1,000 employees from its mixed reality and Azure cloud units, as well as from Damigos’ division dedicated to consumer sales. A communication to staff members from Jason Zander, who holds the position of executive vice president for strategic missions and technologies at Microsoft, was obtained by Business Insider. In it, Zander attributed the layoffs to a strategic shift towards prioritizing investments in artificial intelligence. He stated, "As a corporation, our main objective is to lead in the artificial intelligence domain and to support all our clients in leveraging this groundbreaking technology. In our journey, we take steps that are in alignment with our long-term goals and strategy, ensuring Microsoft’s continued resilience and expansion."

Damigos, a resident of Tacoma, Washington, mentioned that his job loss wasn't directly attributed to an AI initiative by his employers, yet it's evident that Microsoft, the major supporter of OpenAI, is heavily invested in this technology. "It seems that the move towards AI has, regrettably, resulted in customer-facing roles being sidelined," Damigos observed, who has been documenting his experience of being laid off and promoting his abilities on TikTok. "My role was to assist customers in effectively utilizing and comprehending Microsoft's offerings." He also felt that his team was capable of enhancing Microsoft's customer service experience, but the company chose to allocate resources differently.

Microsoft did not verify if Zander's emails were genuine. "Making changes to our organization and staff is a normal and essential aspect of running our business," states Craig Cincotta, a representative for Microsoft. "We remain committed to focusing on and investing in key areas of growth for our future, as well as in the service of our customers and partners."

The long-term effects of artificial intelligence (AI) on employment remain uncertain, but there is a broad consensus among professionals that AI is unlikely to supplant a majority of the workforce in the near future. Nick Bunker, who leads economic research at Indeed, notes that while AI is set to transform the job market, the specifics of this change are yet to be determined. While there are predictions that AI may lead to job creation, there are instances where employees are training AI systems that could potentially replace them. However, current job losses are more a result of the hype surrounding AI rather than the actual implementation of AI as coworkers, which has led to significant layoffs.

Microsoft isn't the only company making cutbacks. In April 2023, Dropbox revealed it would be letting go of 500 employees, with CEO Drew Houston citing the impact of artificial intelligence as a factor. "Ideally, we would relocate staff from one department to another, and we've implemented this strategy wherever feasible," Houston explained. "But to advance to the next level of development, we need a new combination of skills, especially in AI and the initial phases of product creation."

Earlier in the year, Meta's CEO, Mark Zuckerberg, echoed the sentiment of reducing workforce numbers to prioritize AI development. In a February announcement, he highlighted the company's objective of creating leading AI products and services as Meta transitioned out of its "year of efficiency," a phase that saw the company scale down.

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Google has also been channeling investments into its Anthropic AI initiatives. The company's CEO, Sindar Pichai, has issued a caution about ongoing reductions throughout 2024, starting from January. This is happening even as Google experiences robust growth. "We are making responsible investments in the core areas of our business and in the vast opportunities that lie ahead," stated Bailey Tomson, a representative for Google. Throughout 2023 and 2024, various Google departments have been adjusting their operations to increase efficiency and improve collaboration, according to Tomson. "By doing so, we're streamlining our organizational structure. This enables our staff to focus more on groundbreaking projects and the company's top priorities, while also cutting down on unnecessary bureaucracy and hierarchical levels."

This narrative shift towards AI by tech companies is reminiscent of previous strategies such as outsourcing, which resulted in substandard working conditions for some of the contracted workers abroad. "It appears that the focus on AI and the supposed need to make sacrifices elsewhere in the workforce are not genuinely connected, but rather this is a repackaging of a shift that began before the push towards AI," states Parul Koul, the head of the Alphabet Workers Union-CWA, which represents certain employees impacted by the recent job reductions. However, due to the lack of clear information provided to workers regarding whether their job losses are directly linked to AI advancements, it remains challenging to directly attribute specific layoffs to this technology, according to Koul.

The logical progression seems to be that the artificial intelligence these corporations are pouring resources into would eventually lead to significant changes in their own operations. However, as things stand, this shift isn't quite apparent yet. The number of layoffs attributed to AI advancements remains a small fraction of the total job reductions across various sectors. According to a study by the job placement agency Challenger, Gray, and Christmas, over 5,000 positions were eliminated from May 2023 to April 2024, with companies pointing to AI as the underlying cause. This was either because these businesses were refocusing their efforts on AI development or because they had implemented AI solutions to replace certain jobs and functions.

In the technology sector, close to 100,000 people have been laid off in 2024, as per data from Layoffs.fyi, a website that monitors employment reductions within the tech industry. However, certain job categories are starting to show signs of recovery. Job openings for positions involving artificial intelligence or requiring AI expertise accounted for 12 percent of all technology sector job listings in May, marking the highest share in six years, based on information from CompTIA, a non-profit organization serving the US IT sector. Tim Herbert, the chief research officer at CompTIA, notes that artificial intelligence is not an isolated field and predicts that its integration will necessitate the creation of related positions to support this emerging technology. "The introduction of AI is expected to drive investments in various other sectors," he mentions.

Koul notes that while the current shift towards AI might not signify a complete AI dominance, it's worrisome that companies like Alphabet aren't making significant efforts to re-skill their employees for roles in these emerging sectors. He emphasizes that there are respectful and dignified ways to manage the existing workforce through these changes. “Many of my colleagues and fellow union members are motivated by a sense of purpose, driven by the belief in the impact of the products they contribute to. Therefore, increasing the chances for these employees to retrain and transition to different departments would be greatly appreciated,” Koul mentions.

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