Layoffs are hard… and this round IS different than what we’ve seen recently, but when I consider where this is going, I can’t help but be excited!
Starting in late 2025, we have seen a consistent trend of AI-driven layoffs at large companies. While layoffs are not unusual in the corporate world, this round feels different. It is different. If your job is sitting at a computer screen, you should pay attention because you may be next.
What is driving companies to shed staff?
When we say this round feels different, it is because this isn’t a normal strategic realignment. It is a structural shift in the nature of work. Companies see the productivity opportunities of AI and realize they simply don’t need as many people to get the work done as they did a year ago… and most don’t plan to replace that headcount in other areas.
This shift is primarily impacting a group of employees called information workers – people who spend their day in front of a computer, operating a keyboard and a mouse. Think customer service, HR, Finance, IT, legal, sales, and operations. These are major functions in most large companies, where recent forecasts indicate that up to 80% of the work can be automated with the technology available today. To learn more, check out the NovoCircle whitepaper, which breaks down the situation.
Why this round of layoffs is different
Companies continuously re-evaluate their workforce in light of technological and business trends. This isn’t new. They often lay off workers in areas that are either under-performing or aren’t strategically aligned with current priorities. True “reductions in force” aren’t really that common. This headroom is then used to target hiring in growth areas and to refresh the workforce. Although we see news articles about the cuts, if you look at the mid to long-term trends, most healthy companies’ headcounts steadily grow over time.
The second difference in this round of AI-driven layoffs is that many companies are cutting headcount simultaneously. This creates a situation where there is a surge in unemployed workers and a limited set of open positions for them to move into. It changes the economics of the job market. Skills that were in high demand and commanded a premium salary are now surplus commodities.
What are all these unemployed professionals going to do?
Impacted employees struggle to find positions that allow them to move laterally or move up in their careers. Job seekers are forced to either take roles outside their field or accept lower wages than they were making previously for a similar job. It’s a tough situation for them.
Many are taking a break from the job market – seeking retraining in other fields or (if they can afford to) retiring early. Others are waiting it out, depleting their savings and hoping companies will start hiring again before the money runs out. These people worry me.
There is one last group – the people taking this opportunity to start their own business and create something new. These people see the writing on the wall and, instead of waiting and hoping, are taking control of their situation. This is the only group that is truly positioned to “win” in this situation. The rest have a hard road ahead.
What will the next few years look like?
The job market transition we are going through because of AI looks less like normal workforce rebalancing and more like the impacts of an Industrial Revolution, where technology displaces an entire class of workers. Look back to the last industrial revolution for a hint of what is likely to come. We are going to see unemployment. We are going to see despair from people who don’t want to admit that the changes are real. We are going to see anger directed at companies, political leaders, and other decision makers. But then… we’ll figure it out.
I responded to a question on LinkedIn recently where it was asked: “Do you think AI will create more jobs than it eliminates?” That was a great question. My answer was: “AI doesn’t create or eliminate jobs… people do.” There will always be approximately the same number of jobs as there are people who want to work. I’ll get into the economics of that in another article, but the point is this: “It is said necessity is the mother of invention. Feeding our families seems like a necessity, and people are really good at inventing.”
A new wave of small businesses
If the existing job market does not offer opportunities for job seekers, the natural response is for them to become entrepreneurs – creating new jobs for themselves and others. The system will return to a state of equilibrium. So what does this mean for the future? It means we are about to see a major influx of startups and small businesses – creating new products, services, and markets.
The future for the displaced information workers is not just working for large companies… it is starting the small businesses of today that will become the large companies of tomorrow. If you are concerned about AI-Driven layoffs and want to learn more about how NovoCircle can help, contact us.
