Why Are Tech Layoffs Still Happening in 2025

Around 29,000 tech employees were laid off in March 2025. More layoffs coming to multiple Bay Area tech companies with hundreds of people set to lose their jobs. The government efficiency department led the cuts with 216,000 layoffs with nearly 20% of those being jobs related to government technology.

Doge striking again. CNN learning the education department is expected to begin sweeping layoffs tonight. With around 111 tech companies joining the thousands of employee layoffs in the United States, the trend has not changed.

Feels like almost every day we're hearing about yet another tech company conducting these mass layoffs. Although layoffs up to March 2025 have decreased by 13% compared to the same period in 2024, the tech labor market has not fully recovered. So why are tech layoffs still happening in 2025?

In 2025, the tech sector continues to face waves of layoffs that defy predictions of economic recovery and post-pandemic digital expansion. After years of sustained growth marked by massive investments, accelerated hiring, and the promise of continuous innovation, the current reality presents a scenario of structural adjustments affecting both startups and established giants. While frequent explanations such as AIdriven automation or outsourcing of tech services are important factors, there are also underlying causes.

These relate to systemic economic transformations, changes in demand elasticity, reconfigurations of the global labor market, and financial effects on corporate decision-making. Layoffs are also plaguing industries like healthcare, banking, and media. However, the tech industry is the one that's been dominating the headlines.

The persistence of layoffs in the tech sector during 2025 responds to a series of factors that can be identified through the analysis of recent labor market data from the United States and other relevant contexts. During the Great Recession of 2008 to 2009, there was a trend of progressive reduction in routine employment due to technological change. At that time, the labor transformation occurred gradually with a slow transition toward more skilled occupations.

However, in 2025, tech sector layoffs have been faster and broader. For example, companies like Meta, UPS, and Microsoft have announced significant layoffs with UPS cutting 20,000 jobs and automating facilities. UPS announcing layoffs for 20,000 workers and the closing of some facilities.

In contrast, current data reveal that recent economic shocks such as the CO 19 pandemic not only accelerated automation, but also introduced a permanent dimension to job losses in high-risisk sectors. The pandemic acted as a catalyst for automation decisions that otherwise would have taken years to implement. This technological acceleration has structural implications.

Instead of allowing intergenerational and sectoral adaptation, it imposes a pace of change that exceeds normal training and reintegration cycles. Thus, 2025 does not reflect a classic recession, but rather an abrupt reconfiguration of the employment model in the tech industry. Another critical dimension is the evolution of demand elasticity in tech markets.

In early stages of technological development, demand tends to be highly elastic. New products and services create additional needs that translate into hiring. However, as markets mature and products become standardized, that elasticity decreases.

This implies that the same technological progress that initially generated jobs now reduces them as equivalent increases in labor are no longer required to sustain growth. We did a restructuring of the company because we wanted to refocus our operating expense in dollars towards the biggest priority and that's AI. This phenomenon is observed in consolidated tech platforms that reached saturation levels between 2020 and 2023.

Companies like Meta, Alphabet, and Salesforce after aggressively expanding during the pandemic began to experience diminishing returns in new hires and reductions in their workforces as a way to protect operating margins. A determining factor in recent layoffs is the role of financialization in business decisionmaking. In places like Europe and especially in Ireland, company decisions are increasingly guided by financial criteria focused on generating shareholder returns, leaving aside aspects related to employment or social impact.

This prioritization leads to decisions like staff cuts to improve financial ratios even in companies with healthy balance sheets. Private equity raid on some of the best known high street companies in the UK. In the United States, the influence of investment funds and the pressure to maintain high returns on invested capital have pushed tech companies to rationalize organizational structures.

Layoffs are increasingly being used as a way to impose exorbitant profits within companies rather than simply as a reaction to operational losses. Although outsourcing still plays a role, the underlying shift is a new stage in the global relocation of labor. Many highly skilled tech jobs have started moving from the United States to developing countries.

Current technological transformations benefit markets that offer lower costs and tech professionals who while not as highly trained are much cheaper as is the case with India. Employers have an incentive to bring in lower paid, lower experienced workers at the expense of US workers who compete with them. This country has consolidated its position as a leader in IT service exports with export revenues estimated at 194 billion in fiscal year 2023.

In addition, companies like Rakutin have announced significant investments in India with plans to invest at least $100 million and increase their local workforce by 8% in 2025. This process is not simple relocation but a structural reconfiguration. The tech value chain is detaching from traditional markets and talent is becoming globalized.

The result is a net reduction in tech employment in developed countries even as the sector grows globally. In 2024, for example, according to the Bureau of Labor Statistics, India recorded 8. 4% growth in its IT sector while in the United States, tech employment fell by 3.

1%. An immediate consequence of these accelerated changes is the growing difficulty in reabsorbing laid-off workers. The need for continuous training in emerging economies is imminent.

But in developed markets, institutional structures do not always facilitate agile transitions. Reskilling initiatives in the US, although present, have not kept pace with disruption. Politicians and business leaders typically turn to large-scale federal job training programs, but critics say they are clunky.

Intergenerational inequalities that arise during technological transitions are also a factor to consider. Older workers face more barriers to retraining, while younger people enter a saturated market with high demands and less contractual stability. For example, the youth unemployment rate in March 2025 was 9.

6%. While the unemployment rate for workers over 55 was 3. 1%.

This asynchrony between market needs and workforce readiness is a silent driver of persistent layoffs. Although layoffs in the tech sector are presented as a global trend, data show that their causes and effects are highly contextual. In the United States, the focus is on automation and financial pressure in regions like Europe on labor relations and financialization and in India on the opportunity to expand skilled employment.

This heterogeneity indicates that layoffs in 2025 are not due to a single universal factor, but to a convergence of elements specific to each region. The lack of a uniform pattern complicates the formulation of global public policies, making it necessary to adopt a localized and differentiated approach to mitigate the social impact. Layoffs in the tech sector in 2025 cannot be explained solely by traditional narratives of automation or outsourcing, although these have played an important role.

The familiar narrative is that artificial intelligence will take away human jobs. Well, that's not very likely, and we're going to tell you why. There's a growing global army of millions toiling to make AI run smoothly.

These factors, which operate in an intertwined manner, have produced a scenario in which layoffs not only persist but manifest with greater speed, scope, and structural impact than in previous economic cycles. It is necessary to coordinate efforts in areas such as education, financial regulation, employment planning, and industrial development. Without such coordination, the tech sector could reinforce a growth model that excludes many, where innovation does not improve people's lives, but rather generates more instability for those who make the digital world possible.

[Music] At Economy Media, your opinion matters to us. Subscribe and let us know what you think in the comments below.