Dive Brief:
- More than 17,000 job cuts have been directly attributed to AI so far this year, with the tech industry leading the way, outplacement firm Challenger, Gray & Christmas said in a recent report.
- Most of the cuts were announced in the second half the year. In September alone, Challenger tracked 7,000 AI-driven job cuts.
- “Tech firms are undergoing incredible disruption with AI that is not only costing jobs, but also making it difficult to land positions, particularly for entry-level engineers,” Andy Challenger, a senior vice president at the Chicago, Illinois-based outplacement firm, said in the report. “Tech leaders have stressed that AI is changing the nature of work, and more companies are requiring their teams be trained on it.”
Dive Insight:
Salesforce is among the companies that have directly attributed massive job cuts to AI-related initiatives in recent months.
In an August podcast interview, Salesforce CEO Marc Benioff said the company reduced its customer service headcount from 9,000 to about 5,000 after AI agents began handling conversations with customers.
Overall, companies across sectors have announced 946,426 job cuts so far this year, the highest level year-to-date since 2020 when 2.1 million were announced, according to the Challenger report.
The Department of Government Efficiency has been the leading driver, cited in 293,753 planned layoffs so far this year, Challenger said. This includes direct reductions to the federal workforce and its contractors.
Market and economic conditions are the second-most cited reason for workforce reductions, responsible for 208,227 cuts year to date. “This reflects employers’ continued response to economic uncertainty, inflation, tariffs, and shifting demand across sectors,” the report said.
Closings of stores, units or plants have led to 144,652 layoffs so far this year, up from 97,590 during the same period last year. Restructuring efforts have resulted in 100,450 job cuts, while bankruptcies accounted for another 37,590 layoffs, up from 10,700 through September 2024.
Technological updates, including automation and “possibly” AI implementation, have led to 20,219 job cuts in 2025, Challenger said. Another 17,375 were explicitly attributed to AI, including 7,000 announced in September.
The number of layoffs directly tied to AI has skyrocketed since a report released by Challenger in early July.
“We saw a spike in companies, primarily in tech, announce job cuts due to AI,” a Challenger spokesperson said.
