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Tech sector layoffs explained: What you need to know
Large tech layoffs continue through 2026, with headlines showing thousands of people losing their jobs, with restructuring due to AI and slow market growth to blame.
Layoffs are making headlines, and most seem to be centered on one job sector -- tech.
January layoffs were the highest they've been since 2009, according to a report from Challenger, Gray & Christmas, including 22,291 job cuts in the tech sector. The bulk of these came from a round of Amazon layoffs that cut 16,000 jobs, disproportionately affecting tech roles, including AWS. Google and Pinterest also announced cuts in January.
In 2025, 271 tech companies laid off more than 124,201 employees, according to Layoffs.fyi, compared to 152,922 employees in 2024 and 264,320 in 2023.
Unlike previous layoff surges during and after the COVID-19 crisis, layoffs are now more focused on restructuring driven by AI and slow market growth, rather than emergency cost-cutting.
Tech roles have accounted for a large share of recent layoffs due to AI integration and AI-related job consolidation, but roles affected by layoffs go far beyond tech. However, in a high-volume sector, tech layoffs tend to have more visibility because a small percentage of layoffs still translates to thousands of people losing their jobs.
There are several factors contributing to tech layoffs, including uncertain macroeconomic conditions, market instability and the scaling of AI.
Agentic AI
By this point, AI is deeply integrated into day-to-day operations, especially in IT departments. AI is now the top influence on layoff decisions, cited more frequently by HR leaders than industry or market trends, according to a CareerMinds report.
However, AI is going beyond just a tool for workflows -- the rise of agentic AI is reshaping entire teams and workflows. AI was cited as the reason for nearly 55,000 layoffs in 2025, according to Challenger, Gray & Christmas. In the coming year, 32% of companies expect a decrease in workforce size due to AI, according to a McKinsey report.
Agentic AI can complete tasks and processes autonomously, using logic and reasoning with minimal human intervention, leading to a rise in AI agents and workers capable of taking over complex tasks with minimal oversight. Sixty-two percent of organizations are experimenting with AI agents, with a majority of agents being used in IT functions, according to McKinsey's report. By the end of 2026, Gartner predicts that 40% of enterprise apps will feature AI agents, compared to less than 5% in 2025.
Many companies are already integrating AI agents into their workforce. For example, of McKinsey's 60,000 employees, 25,000 are AI agents, according to a Business Insider report. The rise of AI agents means organizations need less human labor to complete complex, high-volume tasks. This has led to layoffs due to role redesigns that move away from administrative, repetitive tasks and toward high-level oversight of automated processes and technology.
Economic uncertainty
After years of economic uncertainty, including ongoing inflation and tariffs, organizations are cutting costs where possible to navigate an unstable market and unexpected macroeconomic shifts. With the rise of AI, organizations can optimize margins and increase profits with less labor involved. Organizations trim head count to ensure that costs remain stable and the company remains profitable even when external economic conditions are less favorable.
In 2025, 55% of companies conducting layoffs cited economic uncertainty, according to a Resume.org survey. Six in 10 companies plan to conduct layoffs in 2026.
Economic uncertainty is also increasing investor and executive pressure to reduce head count and increase margins as investors urge companies to decrease expenses as revenue slows down. PepsiCo announced job cuts and plant closures, as well as slashing 20% of its products, in relation to an agreement with Elliott Investment Management to improve operational efficiency and cut costs.
Leaner organizational structure
The rise of AI and external pressure to optimize costs has led to a shift in organizational structure, with many companies able to do more with less human capital, leading to restructurings and reduction-in-force (RIF).
Instead of a 500-person organization, AI-first startups can do more with less, enabling a rise in 10- to 50-person organizations that use AI agents and automation to achieve operational efficiency and get the same amount of work done as a traditional organization.
Slowed revenue growth and stabilization
Tech layoffs may also result from the industry maturing or becoming more stable after rapid growth. During the pandemic and into the AI boom, tech companies saw rapid expansions both in operations and hiring. Now, many companies are conducting layoffs to stabilize and correct unsustainable growth.
Tech companies may not be on pace to acquire as many new customers as they have already adopted their services. Instead, tech companies may be looking beyond growth and into diversifying products or expanding globally.
Organizations are also prioritizing workforce consolidation and operational discipline to accommodate market shifts and slower revenue growth.
Role and skill shifts
Many companies are also laying off workers due to shifts in skill demands. AI skills are splitting the market, creating a gap between AI-skilled and non-AI-skilled workers. Many organizations are cutting or redesigning roles to rely more on AI and less on human labor. For example, traditional coding-only roles are being replaced by higher-level, AI-focused roles such as AI engineers and automation leads, which focus more on integrating and overseeing AI workflows rather than writing manual code.
These shifts in traditional roles and skill requirements are leading to workforce reductions as companies optimize costs, with employees who lack the skills needed for the new role structure often most affected by layoffs. In September 2025, Accenture's CEO announced layoff plans, targeting employees who couldn't reskill on AI, resulting in 11,000 job cuts.
Notable layoffs
Depending on the size of the company, large layoffs may range from a few hundred to tens of thousands, which can be a large percentage of its workforce. Some big tech companies -- such as Amazon and Meta -- have announced large layoffs in waves. In October 2025, Amazon announced 14,000 job cuts. In January 2026, they cut 16,000 more jobs.
Salesforce eliminated more than 4,000 customer support roles in June 2025. Its CEO Marc Benioff cited AI, saying that it was already doing 30-50% of the work at the company.
In April 2025, Intel cut 20% of its workforce, more than 21,000 roles in a restructuring under new executive leadership. HP announced plans to cut 6,000 roles by the end of the 2028 fiscal year in an AI-focused restructuring.
Layoffs are still rampant across the tech sector in 2026. As of this writing, 35,650 tech employees from 50 tech companies have been laid off, according to Layoffs.fyi.
Why it matters to CIOs
In an uncertain tech environment, layoffs can be inevitable as organizations integrate and optimize AI to improve productivity and efficiency, leading to organizational restructuring and role redesign. It's up to CIOs and stakeholders to understand where roles can be cut and what processes can be automated or redesigned to create a more Agile organization.
However, done without a strategic plan, layoffs can have negative impacts on the organization, including lower morale, loss of internal knowledge and increased operational risks. Staying aware of what's causing layoffs allows CIOs to effectively plan for changes and challenges and mitigate risks.
