Growing IT Talent Market Mismatches AI Driving Tech Layoffs

The Changing IT Workforce

The tech industry is undergoing a transformation. While artificial intelligence (AI) is driving demand for highly specialized skills, it is also contributing to one of the largest waves of tech layoffs in recent history. This paradox—where companies are simultaneously letting go of workers while struggling to fill AI-focused roles—has created a mismatched IT talent market that presents both challenges and opportunities for employers and job seekers.

The layoffs have resulted in an expanded pool of available IT professionals, but many lack the specific AI expertise companies are now prioritizing. As organizations shift hiring strategies to meet the demands of an AI-driven future, they must also find ways to bridge the skills gap and effectively attract, train, and retain top talent.

The Current State of Tech Layoffs

Tech layoffs have been a recurring theme since 2022, with companies adjusting to economic pressures and restructuring their workforce to align with emerging technologies. According to Layoffs.fyi, 470 tech companies have laid off approximately 141,145 employees in 2024 alone, adding to the 428,449 layoffs in 2022 and 2023. These cuts have affected a range of roles, from software engineers to product managers, and even extended to some senior leadership positions.

Several high-profile companies have made significant workforce reductions this year:

• Dell: Cut 5 percent of its workforce, impacting nearly 6,000 employees.
• Intuit: Laid off 1,800 employees while simultaneously ramping up AI hiring.
• Intel: Reduced its global workforce by 15 percent, amounting to approximately 15,000 jobs lost.
• Cisco: Announced a 7 percent workforce reduction, shifting priorities to AI and cybersecurity.
• Microsoft, Meta, Apple, Dell, Samsung, and Qualcomm: Implemented various layoffs throughout the year.

While not all layoffs have affected technical roles, the sheer scale of job losses has significantly increased the number of available IT professionals. However, many of these professionals do not possess the specific AI-related skills that are now in demand, leading to an imbalance in the job market.

What is Driving Tech Layoffs?

1. Post-Pandemic Hiring Corrections

During the pandemic, organizations rapidly scaled up their IT workforce to support remote work and digital transformation initiatives. Many companies over-hired during this period, offering competitive salaries to secure top talent amid a hiring frenzy. As business operations stabilized, companies found themselves with excess staff and inflated payrolls, prompting widespread layoffs to optimize costs.

2. Rising Interest Rates and Economic Uncertainty

The U.S. Federal Reserve’s interest rate hikes in response to inflation have made borrowing more expensive for businesses. Companies that previously relied on low-cost capital to fund expansion and innovation are now adopting a more cautious approach to spending. This shift has led to budget cuts, project delays, and a reduction in IT hiring, especially for roles that do not directly contribute to revenue growth.

3. AI’s Role in Reshaping IT Jobs

Artificial intelligence is playing a dual role in the evolving tech labor market. On one hand, AI-driven automation is reducing the need for certain jobs, particularly entry-level IT roles that can be easily handled by AI tools. On the other hand, companies are investing heavily in AI research and development, leading to high demand for professionals with AI expertise.

AI’s impact is particularly evident in roles related to software engineering, IT support, and data processing, where automation tools can perform tasks traditionally handled by junior employees. Companies that previously relied on large teams of IT professionals to manage infrastructure and support functions are now turning to AI-powered solutions, reducing the need for human intervention.

AI is Reshaping IT Hiring Strategies

1. Increased Demand for AI and Data Science Skills

Organizations are prioritizing the recruitment of professionals with AI expertise. The most in-demand skills include:

• Natural Language Processing (NLP)
• Machine Learning (ML) and AI Model Training
• Cloud Computing and Infrastructure Development
• Data Science and Big Data Analytics
• Cybersecurity and AI-Driven Threat Detection

As AI continues to evolve, companies are seeking highly specialized talent to drive innovation and implement AI-powered solutions. However, the shortage of qualified professionals in these fields is making it difficult for businesses to fill critical positions.

2. Reduction of Entry-Level IT Jobs

AI is automating many routine IT tasks, reducing the demand for junior engineers, IT support specialists, and basic data analysts. Entry-level professionals, who typically rely on these roles to gain experience and advance their careers, are now facing greater difficulty entering the industry.

Organizations that once provided on-the-job training for junior hires are now shifting their focus toward hiring experienced professionals with AI expertise. This trend is contributing to a growing skills gap, where companies struggle to find mid-level professionals with hands-on experience in AI-related fields.

3. Shift Toward Internal Talent Development

To address the skills shortage, some organizations are investing in internal upskilling programs. By training existing employees in AI-related disciplines, companies can retain valuable talent while also building the necessary skills for future success.

Upskilling initiatives focus on AI training, cloud computing, cybersecurity, and advanced data analytics, helping employees transition into higher-value roles that align with emerging industry needs.

Mastering the New Job Market

To bridge the gap between job seekers and the evolving hiring landscape, AMA Interview offers an innovative AI-powered interview preparation platform designed to help candidates navigate the competitive job market.

As companies increasingly shift hiring priorities toward AI and specialized skills, securing a role requires more than just experience—it demands strategic interview preparation. AMA Interview empowers users with one-click question prediction based on LinkedIn job postings, customized mock interviews tailored to their resume and job role, and hyper-realistic AI interview simulations that replicate real-world hiring scenarios.

With AI-generated sample answers, detailed performance reports, and a lifelike AI interviewer with vision capabilities, candidates can refine their responses and improve their chances of landing the right opportunity. As hiring trends shift and job requirements evolve, proactive preparation with AMA Interview ensures job seekers stay ahead in an increasingly competitive market.

Navigating the Talent Crisis

As the IT job market continues to evolve, organizations must take a strategic approach to attracting, developing, and retaining talent. Here are key steps businesses can take to address the talent crisis:

1. Implement Proactive Recruitment Marketing Strategies

With increased competition for AI talent, companies must refine their recruitment marketing efforts to attract top candidates. This includes:

• Building a strong employer brand that highlights AI-driven projects and career growth opportunities.
• Showcasing company culture, innovation, and employee success stories.
• Leveraging data-driven targeted job ads and personalized outreach to reach the right candidates.

2. Focus on Upskilling and Reskilling Employees

Instead of relying solely on external hires, organizations should invest in workforce training programs to develop the necessary AI-related skills internally. Providing employees with access to AI certifications, online courses, and hands-on training can help bridge the talent gap.

3. Adapt Hiring Strategies for a Changing Workforce

Companies should adjust their hiring strategies to reflect the shifting job market, including:

• Offering competitive compensation packages to attract AI specialists.
• Exploring alternative talent sources, such as hiring from non-traditional education backgrounds, bootcamps, and internal development programs.
• Prioritizing flexible work arrangements to appeal to top-tier candidates.

Conclusion

The tech industry is at an inflection point. While layoffs have expanded the pool of available IT professionals, the growing demand for AI expertise is creating a clear skills mismatch. Companies that embrace strategic workforce planning, proactive recruitment marketing, and upskilling initiatives will be best positioned to thrive in this rapidly evolving landscape.

As AI continues to shape the future of work, businesses must act now to build resilient talent pipelines that balance automation with human expertise. The key to long-term success lies in creating a workforce that is adaptable, skilled, and prepared for the challenges of an AI-driven economy.