A not-so-silent reshuffle is under way in the tech sector, and artificial intelligence is at its centre. While executives like Alphabet CEO Sundar Pichai are eager to reframe AI as a productivity booster, the broader market tells a more sobering tale – where entry-level white-collar jobs and middle management roles are being retrenched to make way for algorithmic efficiency.

Speaking to Bloomberg, Pichai pushed back against the notion that AI could render half of Alphabet’s 180,000 employees redundant.

“I expect we will grow from our current engineering phase even into next year, because it allows us to do more,” he said, describing AI as “an accelerator” rather than a job terminator.

For Pichai, the technology is eliminating grunt work and allowing engineers to focus on strategic tasks that move the needle.

Redundancies continue at Alphabet

Yet the numbers paint a different picture. Alphabet has staged multiple rounds of layoffs over the past three years, including 12,000 employees in 2023 and another 1,000 or more in 2024. While 2025 has so far seen more targeted trims – fewer than 100 in its cloud division and several hundred in platforms and devices – the slow drumbeat of redundancy continues.

Beyond Alphabet, the industry trend is unmistakable. More than 238,000 tech jobs were cut in 2024, and another 76,000 have already vanished this year.

Even May, typically a month of renewal, brought heavy losses: Microsoft shed around 6,000 employees or 3% of its global workforce just days after CEO Satya Nadella remarked that up to 30% of the company’s code is now written by AI.

Walmart slashed 1,500 jobs, including many in its global tech team. Less than a week later, IBM said it laid off 8,000 employees, with HR functions among the casualties of automation.

This reshuffling isn’t just about cost-cutting; it reflects a structural pivot.

The pressure for CEOs to cut workers

Camille Fetter, CEO of Talentfoot Executive Search & Staffing, told CIO.com that company boards are now actively pressuring CEOs to reduce workforce costs by 20%, with the expectation that AI will fill the gaps left behind.

“I’m at CEO dinners constantly, and they’re all saying, ‘If you don’t have plans to replace at least 20% of your workforce with these new technologies and efficiencies, then you’re not looking through the right lens,’” she said.

Organisational charts are being redrawn with ruthless efficiency. Mid-tier roles, particularly those linked to oversight rather than execution, are being flattened. “Companies are reconfiguring their org charts to improve efficiency and reduce middle management bloat,” Fetter added.

The motive isn’t just AI hype; there’s an undercurrent of economic caution.

Although J.P. Morgan has dialled down the odds of a recession beginning in 2025 from 60% to 40%, most CEOs are already operating with recession strategies in hand.

“Sadly, a lot of those recession plans basically were dusted off from the pandemic, but now with a new layer of AI,” Fetter said.

A slowdown in hiring and the fate of new grads

For young professionals, the timing couldn’t be worse. Entry-level roles long seen as the foot in the door for fresh graduates are among the first to be swept away.

Oxford Economics suggests AI is playing a direct role in the slowdown of hiring for new graduates. The technology is automating tasks that were once the proving ground for early-career workers. Consequently, fewer are being brought on board, contributing to a rise in youth unemployment, particularly in the US.

The US Labor Department is expected to report a decline in the number of jobs added – from about 181,000 on average in the past two months to 125,000 in May. While the jobless rate is projected to remain at 4.2%, the slowdown is no longer just a blip – it’s part of a wider structural shift.

Still, AI’s long-term trajectory remains uncertain. When asked whether the world might never reach artificial general intelligence – machines as capable as humans across all tasks – Pichai paused.

“You’ve always had these technology curves where you may hit a temporary plateau,” he said. “So are we currently on an absolute path to AGI? I don’t think anyone can say for sure.”

AI is not waiting on certainty. It’s already nudging businesses towards leaner teams, faster iteration, and a reimagined definition of work.