Layoffs Driven by AI... Companies Conceal the Truth

"Strategic Silence... Concerns Over Backlash From AI-Driven Layoffs"

Recently, despite the U.S. stock market reaching all-time highs and the economy experiencing a boom, major companies have been making unusually large-scale layoffs. According to a report by U.S. economic media outlet CNBC on July 20 (local time), these workforce reductions are being driven by the adoption of artificial intelligence (AI), but companies are concealing this fact.

Arvind Krishna, CEO of IBM, stated in an interview with The Wall Street Journal (WSJ) in May that the company had laid off 200 human resources employees and replaced them with an AI chatbot, while the total number of company employees increased as resources were reinvested elsewhere. Sebastian Siemiatkowski, CEO of fintech (finance + technology) company Klarna, said in a May interview with CNBC that the company reduced its workforce by about 40% as it invested in AI.

Reuters Yonhap News

While these companies have unusually disclosed that layoffs were due to AI, experts believe that IBM and Klarna are not the only ones reducing staff because of AI. Most companies cite reasons such as organizational restructuring, reorganization, or optimization, but experts point out that AI is often the hidden driver behind these actions.

Christine Ng, a professor at Harvard University, said, "What we are witnessing now is AI-driven workforce restructuring that is simply not being publicly acknowledged. Only a very few companies openly say, 'We are replacing people with AI,' but in reality, that is what is happening."

Candace Scarborough Parsons, director of cybersecurity and software engineering, noted, "Given the recent strong financial results, it is clear that these layoffs are not a response to financial difficulties. The timing of the layoffs suspiciously coincides with the introduction of large-scale AI systems."

There are several reasons why companies conceal layoffs caused by AI. Professor Ng explained, "This silence is strategic. Clearly stating that jobs were replaced by AI could provoke backlash from employees, the public, or even regulatory authorities. Speaking ambiguously helps manage the atmosphere."

In fact, Duolingo faced backlash and withdrew its plan after announcing an intention to gradually reduce contract workers and implement AI.

Risk aversion is another factor. This is because AI may not deliver significant results. Taylor Gocher, vice president of IT outsourcing company Connext Global, said, "AI is definitely a factor behind recent layoffs," but also noted, "Companies invest heavily in automation, but sometimes they have to reverse those decisions." He explained, "If AI does not work as intended, companies quietly rehire outsourced or overseas workers."

According to the World Economic Forum (WEF) Future of Jobs Report 2025, 41% of employers worldwide plan to reduce their workforce due to AI automation within the next five years. Dario Amodei, CEO of AI company Anthropic, predicted that generative AI such as their Claude model could replace half of all entry-level office jobs.

Professor Ng pointed out that a turning point will come when companies become more transparent about employment changes caused by AI, but by then it will be irreversible. She warned, "The scale of layoffs will be enormous, and the only thing individuals can do is adapt."