“In recent layoffs, AI’s role may be bigger than companies are letting on”, 22 July 2025

As rounds of layoffs continue within a historically strong stock market and resilient economy, it is still uncommon for companies to link job cuts directly to AI replacement technology.

IBM was an outlier when its CEO told the Wall Street Journal in May that 200 HR employees were let go and replaced with AI chatbots, while also stating that the company’s overall headcount is up as it reinvests elsewhere.

Fintech company Klarna has been among the most transparent in discussing how AI is transforming – and shrinking – its workforce. “The truth is, the company has shrunk from about 5,000 to now almost 3,000 employees,” Klarna CEO Sebastian Siemiatkowski told CNBC’s “Power Lunch” in May….

“What we’re likely seeing is AI-driven workforce reshaping, without the public acknowledgment,” said Christine Inge, an instructor of professional and executive development at Harvard University. “Very few organizations are willing to say, ‘We’re replacing people with AI,’ even when that’s effectively what’s happening.”

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Starting two to three years ago, freelancers were among the first employees that companies were direct with in discussing AI’s role in job cuts. 

…Copywriting, graphic design, and video editing have borne the brunt of the changes, according to Inge, and now the labor shift has begun to work its way into the full-time force.

… According to the World Economic Forum’s 2025 Future of Jobs report, 41% of employers worldwide intend to reduce their workforce in the next five years due to AI automation. Anthropic CEO Dario Amodei recently predicted generative AI like his firm’s Claude large language model could wipe out up to half of entry-level officer worker jobs.

…There will be a tipping point in the future when companies will be more uniformly transparent, but by that time, AI’s role in the labor market will be obvious.