Layoffs have emerged as a defining feature of the global job market in 2025, with artificial intelligence increasingly cited as a key driver behind workforce reductions at major technology firms. According to consulting firm Challenger, Gray & Christmas, AI was linked to nearly 55,000 job cuts in the United States this year alone.

Overall, employers announced about 1.17 million job cuts through 2025 — the highest since the Covid-19 pandemic year of 2020, when layoffs crossed 2.2 million. The trend accelerated towards the end of the year, with 153,000 job cuts announced in October and over 71,000 in November, including more than 6,000 explicitly attributed to AI.

Why companies are turning to AI

With inflationary pressures, rising tariffs and a push to control costs, AI has become an attractive short-term efficiency tool for businesses. A November study by the Massachusetts Institute of Technology found that AI can already perform tasks equivalent to 11.7% of the US labour market, potentially saving up to $1.2 trillion in wages across finance, healthcare and professional services.

However, some experts remain sceptical. Fabian Stephany of the Oxford Internet Institute has suggested that AI may sometimes be used as a convenient explanation for layoffs following pandemic-era overhiring, calling it a form of “market clearance”.

Major firms citing AI in job cuts

Several global companies have openly linked restructuring decisions to AI adoption:

  • Amazon cut 14,000 corporate roles in October, its largest-ever layoff round. CEO Andy Jassy warned that AI would reduce the need for some roles while creating demand for others.
  • Microsoft reduced its workforce by about 15,000 jobs in 2025. CEO Satya Nadella said the company must “reimagine” its mission for an AI-driven era.
  • Salesforce eliminated around 4,000 customer support roles, with CEO Marc Benioff stating that AI now handles up to half the company’s work.
  • IBM announced a 1% global workforce cut in November, even as it increased hiring in critical-thinking roles.
  • CrowdStrike laid off 5% of its workforce, directly attributing the decision to AI-driven efficiencies.
  • Workday cut 8.5% of its staff to prioritise AI investments.

Implications for India and Karnataka

While these layoffs are centred in the US, their ripple effects are being felt in India’s tech ecosystem, including Bengaluru. As global firms restructure, Indian professionals face both risks of job displacement and opportunities in new AI-focused roles, underscoring the need for reskilling and policy preparedness