When the Israeli software firm monday.com told regulators this week it would cut about 620 jobs, roughly a fifth of its staff, it reached for the phrase of the year. The layoffs, the company said, were part of a "restructuring" toward "a leaner, more focused operating model" in support of its "AI-driven growth strategy." Co-founder Eran Zinman insisted the move "was not made to reduce costs or replace people with AI." It was, in other words, an AI layoff that was somehow not about replacing anyone with AI.
That contortion is becoming familiar, and so is what tends to happen next. A Financial Times analysis found that US tech companies have shed nearly 140,000 jobs since January, with Amazon, Oracle, Meta and Microsoft accounting for almost 50,000 as they pour hundreds of billions into data centres. Yet the same analysis found something the press releases leave out: firms that blamed AI for cuts went on to underperform the Nasdaq by almost 10 percent over the following 30 trading days. The market, it seems, does not entirely believe the story either.
The more striking evidence is the walk-back. Research from staffing firm Robert Half found that more than three in ten US hiring managers who eliminated roles after adopting AI later re-created those same roles, or near-identical ones. Gartner expects half of the companies that cut headcount for AI to be rehiring for similar work by 2027. The anecdotes are piling up to match. Ford rehired more than 300 workers in June after deciding AI could not hold its manufacturing quality. The Commonwealth Bank of Australia reinstated about 45 customer service staff, and apologised, after an AI voice bot could not cope with call volumes. Klarna, which once boasted its AI did the work of 700 agents, has quietly rebuilt its human support team.
There is a pattern underneath, and it is not flattering to the buyers. As one recurring account has it, a company announces AI will do the work, trims staff, then discovers six to twelve months later that the AI handled perhaps 60 percent of the tasks, and rehires. An MIT study cited at a London conference this year found that 95 percent of enterprise generative-AI pilots were failing to deliver a return. Employers, in the words of one executive quoted at the event, have been "betting on the promise of AI" while cutting the very people needed to make it pay off.
None of this means the disruption is imaginary. Anthropic's own usage data ranks computer programmers, customer service representatives and data entry workers as the most exposed occupations, and Stanford researchers found employment among young software developers has fallen nearly 20 percent since late 2022. London, with its concentration of finance and professional services, was just rated by the OECD as the most AI-exposed city in the world, with three in four jobs highly exposed. The point is subtler: exposure is not the same as replacement, and the firms treating the two as identical are the ones writing apology emails.
The most telling shift may be the quiet return to hiring. Alphabet, railroad operator CSX, tool maker Snap-on and government contractor Booz Allen have all told investors in recent days that they plan to add staff, often in the junior roles once assumed to be first against the wall. "Just because you have coding agents doesn't mean you're not hiring engineers," said Lattice chief executive Sarah Franklin, whose firm has watched thousands of clients return to hiring entry-level workers. The wipeout, for now, is on hold. What comes next depends on whether the AI actually does the job the layoffs assumed it already could.