AI and pink slips: Navigating the turbulent job market of 2024

AI is causing upheavals in the tech industry and global layoffs are on the rise in 2024. Amidst this turmoil, resilient MSMEs are emerging unscathed, presenting a stark contrast to the layoff trend.

   
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In the wake of the global upheaval marked by the ‘great resignation,’ 2023 witnessed the tech industry grappling with layoffs, company closures, and unprecedented challenges. Hopes for a better 2024 were swiftly shattered as the new year ushered in a global wave of layoffs. Giants like Google tightened their belts, implementing multiple rounds of job cuts, and even renowned platforms like YouTube were not spared, releasing a significant number of employees. News reports of eBay planning to sack around 1000 employees, or 9 per cent of its workforce, added to the somber picture. And the list goes on.

As of January, the layoff count stands at a staggering 28,970 employees across 104 tech companies, according to layoffs.fyi.

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Google and Amazon, in particular, have given clear signals that job cuts will persist throughout the year, driven by substantial investments in generative AI. Surprisingly, even Indian tech companies, presumed insulated from the global hiring freeze, have started handing out pink slips, with prominent names like Flipkart, Paytm and InMobi making tough decisions.

Continuation of 2023 trend

The layoff trend witnessed among major enterprises and IT companies in 2023 appears to continue in 2024.

Kajal Malik, Co-founder and CBO at PickMyWork, a gig platform, opines that workforce dynamics or job trends are largely influenced by a cyclical pattern of over-hiring during optimistic periods and subsequent optimisation during challenging times.

“Market pressures and investor expectations further contribute to the ongoing trend of layoffs, as organisations streamline operations to meet external demands. Likewise, technological shifts, driven by advancements in AI and other intelligent automation systems, exert a notable influence on layoffs and hiring patterns,” she says.

AI to impact jobs

While generative AI holds the potential to radically transform the business scenario, it’s also a looming threat that continues to cast a shadow over the job market.

The International monetary fund (IMF) is also concerned about this troubling trend. The transformative power of AI, as predicted by the IMF, is expected to impact jobs globally, potentially exacerbating overall inequality.

According to the agency’s analysis, about 60 per cent of jobs may be impacted by AI in advanced economies. Around half the exposed jobs may benefit from AI integration, enhancing productivity, it says.

“In most scenarios, AI will likely worsen overall inequality, a troubling trend that policymakers must proactively address to prevent the technology from further stoking social tensions,” IMF Managing Director Kristalina Georgieva says in a blogpost.

In emerging markets and low-income countries, however, AI exposure is expected to be 40 per cent and 26 per cent, as per the IMF.

“These findings suggest that emerging markets and developing economies face fewer immediate disruptions from AI. At the same time, many of these countries don’t have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality among nations,” says the IMF.

Out of skills, out of job

Analysts and industry insiders anticipate that layoffs in 2024 will be more focused and on a smaller scale.

However, the AI influence on the job market is staggering. According to some sources, 30 per cent of the global workforce fear AI. For India this number is 74 per cent.

It implies that without AI skills, the workforce will be affected.

“Companies eager to keep pace in the AI race are inclined to undertake such measures to balance the massive investments they are making in this technology,” says serial entrepreneur and angel investor Somdutta Singh.

In her opinion, companies are taking these stringent measures just to ensure that they don’t fall behind in the AI revolution. Thus, companies are prioritising the development of these capabilities, even if it means redirecting resources from other initiatives.

A survey by Mercer | Mettl recognises this trend, finding that HR leaders rank expertise in generative AI as the most in-demand competency in 2024.

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According to the report, automation and AI will continue to change the nature of work in numerous industries. Content writers and customer service representatives are the two job profiles most at risk of obsolescence, with 51 per cent and 46 per cent of HR experts expecting that AI will likely replace these roles, respectively.

Demand for AI-related jobs like machine learning engineering and AI product engineering, is expected to increase.

Siddhartha Gupta, CEO, Mercer | Mettl, speaking on the findings says, “As we navigate through an era where skills are becoming redundant at an unprecedented pace, empowering the workforce is key. Companies need to embrace inclusivity as a mindset now more than ever to better understand their workforce and plan effectively for the future.”

According to experts, the surge of AI is bringing about considerable dynamism, prompting companies to adjust their hiring priorities. AI is also creating new opportunities and reshaping industries. While certain roles may evolve or become obsolete, the overall impact of AI on employment is a mix of challenges and chances for growth.

Despite uncertainties, there’s one segment which is faring comparatively better than the enterprises—at least in not handing out pink slips.

It’s our MSMEs.

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Zero layoffs in 2023

According to the statistics collated by Mercer | Mettl, mid-size companies remained resilient and implemented a minimal reduction in hiring, with 81 per cent of companies reporting zero layoffs. Most companies that announced layoffs were from the IT services, computer software, and financial services sectors.

The growth of remote and flexible work models, as well as the rise of gig economies, can be attributed to this trend. HR surveys for 2024 predict that these will be the major themes among recruiters, with 59 per cent of HR professionals noting that they continue to hire freelancers and 61 per cent reporting hiring remote workers in the past year.

The ongoing layoffs and their root causes suggest a probable shift towards a more cautious hiring approach. Based on this, Malik foresees new job trends in 2024, saying, “Future workforce planning is expected to emphasise roles that not only align with the current economic conditions but also reflect the imperative of staying abreast of technological advancements.”

In tandem with this shifting landscape, the gig workforce will continue to be favoured by digital companies. Its inherent flexibility enables swift adaptation to project-based needs, allowing organisations to tap into a diverse pool of talent, on demand. This model not only presents a resilient solution promoting agility but also proves cost-effective in an ever-evolving business environment.

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