Are Tech Layoffs Just 'AI Washing' For Bad Performance?

In the first quarter of the year, 78,557 employees have been laid off in the tech industry. 

More than three-quarters (76%) of the positions impacted were based in the US, with newspaper Nikkei Asia sharing that 37,638 of the layoffs were due to AI and automation replacing the human workforce. This equals roughly 47.9%. 

Entry-level positions in coding and customer service are reportedly being impacted by the technology, according to a Stanford study, and an MIT simulation project discovered that AI could replace nearly 12% of the US workforce. This would represent approximately $1.2 trillion in lost salaries.

It will be “painful for all of us”

The first three months of the year have seen global businesses cutting a large number of employees. 

Anthropic CEO Dario Amodei and Ford CEO Jim Farley have both recently shared cautions that AI threatens to eliminate roughly half of all entry-level white-collar jobs across the US.

Tech giant Oracle has recently announced over 10,000 employee layoffs, in a bid to redirect savings toward expanded data centre capacity – suggesting a deliberate shift toward AI-driven infrastructure over human labour.

“I don’t know if they are directly related to actual productivity gains,” Cognizant Chief AI Officer Babak Hodjat shares. “Sometimes, AI becomes the scapegoat from a financial perspective, like when a company hires too many, or they want to resize, and it gets blamed on AI.”

Expanding on this, he suggests that AI layoffs could happen; it could take as long as a year, “before companies start seeing real productivity gains from AI". He adds that “it will be painful for all of us as we’re going through it, and simply because it’s a transition".

Are businesses AI washing?

Although there has been a sharp rise in the number of layoffs within the tech sphere, some analysts are suggesting that this could instead be an excuse for poor business performance. 

For example, OpenAI CEO Sam Altman said: “I don’t know what the exact percentage is, but there’s some AI washing where people are blaming AI for layoffs that they would otherwise do, and then there’s some real displacement by AI of different kinds of jobs.” 

In contrast, some tech businesses, such as IBM, have actually increased their headcount, with the business claiming to have tripled its entry-level hiring headcount in 2026. 

From this, the business suggests that although many junior-level roles can be optimised with AI, keeping human judgement is essential. 

What’s more, this strategy suggests that although reducing entry-level positions may generate immediate cost savings, organisations that downsize may be dismantling their developmental pipeline that produces tomorrow's experienced professionals and mid-level managers.

Supporting this, Babak adds: “There’s going to be a ton of people that are coming out of school that can’t find a job and don’t have the domain expertise.” 

Consequently, Cognizant has shared plans to retrain its existing staff and hire additional junior talent to work alongside AI tools – rather than treating the technology as a replacement strategy. 

The business’s approach, therefore, suggests a path forward, seeing AI adoption not as a tool of mass displacement, but rather as a way for an ever-evolving workforce to continue to expand.

“You have to bring them in. You have to have them learn on the job, on how to use AI within the various domains,” concludes Babak.