Tech industry firms began January with layoffs, mostly citing strategic changes or missed growth targets. But none came close to approaching Citigroup's planned cut of 20,000 or crediting the role of technology in improving productivity.
Over the past three years, Citi, in a category it calls "transformational expenses," has increased its technology spending to $1 billion -- double its 2021 investment.
Citi's planned layoffs, which will happen over three years, follow a net loss of $1.8 billion in its fourth quarter.
"These investments will ultimately deliver benefits from automation, from well-governed data, from consolidated platforms," said Jane Fraser, Citi's CEO, at a noontime call with financial analysts on Friday. Executives on the call said Citi will realize "productivity savings" from the technology.
Financial analysts on the call questioned the firm about its strategy and asked how it would handle employee morale as it cut about 8% of its workforce.
"We're very mindful that there is a human impact of the decisions that we're making," Fraser said. "We're trying to be as transparent with our people as we are with our investors. I think that's the most humane way to do this."
Victor Janulaitis, CEO at research firm Janco Associates and a labor market analyst, said AI-enabled automation is replacing jobs in industries such as help desks and is even speeding up software code development. "They don't need as many entry-level coders, so those jobs are going away as well," he said.
So far this month, tech firm layoffs have been less than 6,000, according to data maintained by Layoffs.fyi.
David WagnerSenior research director, Avasant
That includes 1,800 positions at Unity Software, a San Francisco-based game developer. The company reduced its workforce by about 25% to refocus on its core business, according to a regulatory filing. Google cut about 1,000 employees, and Amazon's Twitch, a live streaming site, said its business missed its optimistic targets.
A Google spokesperson said the firm is making changes to invest "in our company's biggest priorities and the significant opportunities ahead."
Veeam Software, a backup and disaster recovery firm, confirmed an employee's LinkedIn post that the firm had cut some 300 positions. But a spokesperson said the firm plans to hire nearly 500 new engineering and development roles in 2024.
"Like any successful company, during annual planning, Veeam makes decisions to prioritize investment areas reflecting the evolution of the business and the market," said Matthew Bishop, COO at Veeam, in a statement.
Citi executives never mentioned AI specifically, but just about all software today almost universally claims some AI capability.
David Wagner, senior research director at Avasant, said there are types of automation that make specific tasks -- such as document processing and accounts payable -- so productive that "it may lead to layoffs without necessarily creating new jobs."
But Wagner said other types of AI, such as generative AI (GenAI), might make workers more productive without negatively affecting jobs.
In a just-released survey of 200 executives at firms using GenAI, Avasant found that less than 1% said it would lead to job cuts, and more than a third said it would lead to significant job growth.
"It is possible AI of all types is having a negative impact on jobs in the short term," Wagner said. But not all AI is equal. "There will be a new demand for workers who can creatively deploy GenAI."
J.P. Gownder, a Forrester Research analyst, said "the conversation about AI and layoffs is prone to exaggeration."
"Leaders who perform layoffs want to tell a good story to Wall Street about why layoffs are happening because they are innovative and using AI," Gownder said. "Some of this is not exactly true."
Patrick Thibodeau covers human capital management and ERP technologies. He has worked for more than two decades as an enterprise IT reporter.