Is AI the Convenient Scapegoat for Technology Layoffs?
By Shivaram Rajgopal, Contributor
August 17, 2025
As headlines scream about artificial intelligence displacing entry-level software engineering jobs, a deeper look reveals a more nuanced reality. Is AI truly the primary cause of recent layoffs in the technology sector, or is it serving as a convenient cover for other factors such as prior overhiring and management miscalculations? To explore this question, we conversed with senior managers in technology firms and Garud Iyengar, a distinguished engineering professor at Columbia University known for his balanced view on AI.
Tech Overhiring During the Pandemic
Senior managers pointed out that during the COVID-19 pandemic, many technology companies expanded their engineering teams rapidly but lacked sufficient cross-division coordination. This led to siloed teams often performing redundant or overlapping tasks across their organizations. Now, as companies reassess their post-pandemic workforce needs, they are consolidating teams and reducing overlaps, naturally resulting in layoffs.
Garud Iyengar adds a critical dimension to this discourse. While acknowledging the pandemic-driven overhiring, he emphasizes that AI has accelerated redundancies in tech roles. AI-powered tools like GitHub Copilot and automated code generation platforms have reduced the necessity for large teams tackling routine development tasks. For instance, the CTO of Infosys — a major Indian IT company — reports seeing a 30% reduction in entry-level coding roles because AI enables smaller teams to maintain or improve productivity levels.
AI’s Role: A Cover for Cost Cutting?
Despite AI’s impact in streamlining tasks, many layoffs would have likely occurred anyway due to prior strategic miscalculations. Some executives are using AI as a scapegoat to shift attention away from poor planning and overambitious growth. It’s often simpler for CEOs to attribute job cuts to AI’s disruptive potential rather than admit to errors in managing growth trajectories.
This narrative raises important questions about how companies communicate workforce changes to the public and their own employees. The hype surrounding AI sometimes obscures the underlying business realities such as supply-demand imbalances and the natural lifecycle of organizational restructuring.
A Call for Greater Transparency
The discussion invites a more balanced and transparent understanding of technology sector layoffs. AI is undoubtedly changing work dynamics and will influence job structures in the future, but today’s layoffs cannot be attributed solely to AI. Instead, they reflect a mixture of pandemic-era decisions, evolving business priorities, and the gradual incorporation of AI tools that enhance productivity.
Employers and observers alike should avoid oversimplified narratives that cast AI merely as a job destroyer or a scapegoat. Recognizing the complexities can help stakeholders prepare strategically for a future where AI is a powerful force shaping—but not the sole cause of—employment changes in tech.
Shivaram Rajgopal is the Kester and Brynes Professor at Columbia Business School and a Chazen Senior Scholar at the Jerome A. Chazen Institute for Global Business. He specializes in leadership and finance with a focus on technology-driven workplace changes.
