Tech CEO Explains: The Real Reason Behind AI Layoffs

In 2025, 510 tech workers are being laid off every single day. That’s more than 80,000 people. That’s one person losing their job every three minutes. And while you’re reading this article, 15 people will get the dreaded email.

If you’re in tech right now, you’ve probably felt this, this anxiety, the refresh of LinkedIn, seeing another open to work. Maybe you’ve been laid off, maybe your friends have or maybe you’re wondering if you are next. Here are the 6 high demand jobs that AI can never replace.

Is It Really AI?

Everyone keeps saying that it’s because AI is replacing us. But when you actually look beyond the fear-mongering, that’s not the full story. The full story is so much more calculated, and honestly, it’s brutal with all of the uncertainty out there. The tech job market in 2025 has completely flipped.

A few years ago, engineers were getting multiple job offers and sign-on bonuses. Companies were literally fighting over talent, and now senior engineers with over 10 years of experience are struggling to find work. People who built the systems running half of the Internet are getting rejection after rejection, and here is what’s weird.

At the same time, companies are laying off 1000s of engineers, they are also hiring just different engineers with a new skill set, and with all of this happening, the same companies are spending more money than they have ever spent before in their history, not on people, but on AI infrastructure that loses billions of dollars every single year. So today, I want to walk you through what’s really driving these decisions.

Real Game Behind Layoffs

Why are companies laying off tech workers? Because once you understand the real game being played. You can start preparing and get ahead of the curve. Let’s begin where it all started. In March 2020, COVID-19 hit, literally overnight, the entire world went digital. I remember being in the office and being told that we could go home. We thought that we would be bad within four to five weeks. Max, boy, were we in for a treat.

Zoom calls became the new norm, and everyone was shopping online. And for the tech companies, AFL, they had just won the lottery; every metric was exploding. Revenue that companies were projecting for 2025 was being achieved in 2020, so these companies did what any rational business would do. They hired like their lives depended on it. Amazon went from 800,000 employees in 2019 to 1.5 million by 2022, nearly doubling. Google’s headcount grew by 67% Facebook’s order doubled from 43,000 to 87,000 people.

The entire industry was just throwing money at talent. My own engineering team grew by five people in the space of just a few months. Massive sign-on bonuses for engineers became normal, and companies were literally poaching entire teams from each other, and everyone was echoing the same story. This is a new normal. Remote work was here to stay. E-commerce has permanently replaced retail.

And then 2022 happened. The world started reopening. People went back to offices. Interest rates started spiking really fast, and suddenly big tech companies found themselves with massive workforces they actually didn’t even need for the world that actually existed. Now here is where things get really interesting.

You might think the logical response would be to admit the mistake, right, come clean to their investors and say, hey, you know, we got caught up in the moment and just simply over hired. It’s our fault. And you know, we should have seen this coming. But no, that’s not what happened, because you can’t just tell Wall Street that we screwed up. That makes you look incompetent, tanks your stock price.

So companies needed a different story. They needed a narrative that made massive layoffs sound strategic instead of reactive. Enter AI. Suddenly, layoffs weren’t about COVID-19 overcorrection. They were about AI transformation and operational efficiencies. And the data backs this up, because a huge percentage of people being cut between 2020 and 2022, AI didn’t make their jobs obsolete.

Post Pandemic Bubble

The post-pandemic bubble burst. Now this code overcorrection also created an opportunity that companies are absolutely exploiting. And I noticed, because I’ve seen this literally happening in the UK as well, the average software engineer in the US makes about $150,000 a year. Just in terms of selling an engineer in India costs about $15,000 per year, 1/10 of the cost. That means that you can fire 1000 US engineers, save $100 million a year, and then hire 2000 engineers in India for just $30 million and then pocket 120 million difference while actually doubling your developer capacity.

And the most insane example of this happened literally just last week. You’ve probably heard about builder AI. This was a $1.5 billion AI company that had an AI called Natasha, which could supposedly build entire mobile apps using AI. Well, it turns out that Natasha was actually 700 offshore Indian software engineers working behind the scenes for years. They convinced investors that they had built GGI. Now, the part of this story that I want you to focus on is this, can you imagine how talented those 700 Indian software engineers actually are?

They can’t have been anything short of exceptional, because think about it, they convinced investors that they were AI for almost a decade. All of that to say the offshore market is continuing to get more attractive, and US companies are taking advantage of all US.

Companies that have laid off us employees have replaced them with offshore workers. And this isn’t just restricted to just India. Even in the UK, you can hire a senior engineer and pay them half of the salary that you would for the equivalent talent in the US the UK offshore area, before the US craziness. Suddenly it becomes of why wouldn’t big tech companies take advantage of this to save cost, especially when they need every dollar that they can find for what’s happening next? Because now we get to the part that’s actually about AI, and this is where real money is going right now.

AI Gold Rush

There’s a gold rush happening in tech, but it’s not for gold. It’s actually for AGI, artificial general intelligence, that’s AI that can think, reason, and solve problems like humans. Everyone believes that AGI is making five years away, and this will be by far the most transformative technology for humanity that we have ever seen as we’re trying to build robots that will replace us. So naturally, every major tech company is betting everything on this, even though the technology and, by the way, for what it’s worth, I do believe there will be multiple winners in this AGI race.

I don’t think that this will be a winner-takes-all scenario, and if I’m wrong, let’s just hope that it’s not some Altman that takes it all, because then it’s definitely game over for all of us that said, the numbers paint the picture. Over the next few years, OpenAI AI expected to burn through $44 billion and others. Microsoft, $80 billion this year. Google, $75 billion Amazon, $100 billion a meta, $65 billion a display book where companies are making big bets on future technology that’s not profitable right now isn’t a new concept, Amazon did the exact same thing with cloud computing and AWS in the 2000s they lost money for almost a decade building data centers while everyone called it a waste.

AWS generates over $100 billion annually and controls a third of the cloud market. But this time, the stakes are infinitely higher. AGI is the biggest transformation in human history, reshaping everything as we know it. Every single tech CEO knows that they have to continue to invest in AI because they’re actually risking the future of their companies. So they’re all just backed into a corner. And as a result of all of this, investment, companies are discovering that building for an AI-first world requires completely different skills, and building for a web-first world, where we have lived in the past 20 years.

Technology Stack is Changing

The entire technology stack is changing. So they are making a strategic trade of old stuff, and then hiring people who will build the new stuff. Companies are firing software engineers, web developers, and at the very same time, they are aggressively hiring AI Infrastructure Engineers, cloud engineers, machine learning specialists, and data engineers.

And it makes sense, because these AI systems like ChatGPT require a completely different skill set to build and maintain. And the numbers tell the story perfectly. The average experience level of tech workers getting laid off is 12 years. Firing people to build the old stuff and then hiring people to build the new stuff, the new world that we’re all going to be living in. The same thing happened when the world shifted from desktop software to websites in the late 90s. Back then, if you were great at building Windows desktop programs, you were very valuable. But when everything started moving to the internet, companies needed different skills. They needed people who could build websites, not desktop apps.

So demand for desktop developers began collapsing, whilst demand for web developers began exploding. And the same thing is happening right now, just way faster and at a much bigger scale. Companies are investing billions in AI infrastructure. So they need people who can build AI systems, and they don’t need as many people who can build traditional websites and applications.

And here is the part that ties everything together. When companies needed to free up money to help fund their AI investments. They have choices about where to get that money from. So they could reduce stock, they could cut bonuses, they could delay some of their infrastructure spending. But the reality is that the easiest thing to do is to cut people, laying off workers, gives companies immediate cash flow for improvement, for investment growth.

Role of Wall Street

Wall Street loves efficiency stories, and a lot of the time, companies see their stock prices go up on the back of the layoff announcements. So not only are they choosing to cut jobs because it’s a path of least resistance, but they’re also getting rewarded for it too in the market. Welcome to capitalism in 2025. Now, when you put all of it together, the uncomfortable truth that your job might not be getting eliminated because AI can do it better. Your job might be getting eliminated because your company hired during the pandemic on someone equally talented in another country to do it for less money, or decided to go all in on AI.

And for a lot of you guys, I know this is some heavy stuff. I know that it’s scary, and if you’ve been laid off, if you’re worried about being laid off, or if you’re watching this happening to your friends or your colleagues, it is definitely not easy. But here is the thing, you can’t just put your head in the sand and pretend that this isn’t happening, because when you do that, you are letting fear take over, and fear doesn’t help you prepare for what is coming.

Final Words

You have to start preparing now. If you’ve been laid off, you need to understand that the market, the skills that got you your last job, might not get you your next one. You need to look at where companies are actually hiring and investing their money in cloud infrastructure, AI systems, machine learning, operations, and cloud security. These are the areas where demand is exploding, and if you’re still employed, but you can see what is coming, especially if you’re a software engineer working on systems.

You need to be preparing right now, get ahead of the curve to when the layoff hits. You’re ready with the skills that the market actually wants. And the thing is, I don’t know how all of this AI and AGI stuff will end up, you know, maybe these companies are right, and AGI does change everything. Maybe they are wrong and they’ve wasted hundreds of billions of dollars. But what I do know is this: if you understand what’s driving layoffs in tech, you’ll be able to better position yourself for whatever’s coming next, and then it’s simply your choice. You can either prepare for the new reality or you can get left behind. Good luck!