Company boards push CEOs to replace IT workers with AI

A huge wave of IT layoffs — with more than 238,000 jobs lost in 2024 and another 76,000 so far in 2025 — isn’t likely to die down soon, as organizations brace for a potential recession and look for huge workforce cuts through the use of AI.

While many AI evangelists have played down the potential for the technology to replace human workers, that message hasn’t resonated in board rooms, as company leaders look to reinvent their business operations, IT hiring experts say.

Many boards of directors are now pushing CEOs to cut 20% of workforce costs, with the expectation that AI will take over the eliminated jobs, says Camille Fetter, CEO at Talentfoot Executive Search & Staffing.

Spurred in part by worries of a coming recession, many companies are prioritizing efficiency and agility, she adds.

“Companies are reconfiguring their org charts to improve efficiency and reduce middle management bloat,” Fetter adds. “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.’”

May is a bad month

In May alone, Microsoft announced layoffs of 3% of its workforce, about 6,000 people, after CEO Satya Nadella noted earlier that up to 30% of the company’s own code is written by AI. Days later, Walmart announced 1,500 layoffs, with members of its global tech team among them.

Less than a week after the Walmart cuts, IBM reportedly laid off 8,000 employees, with many HR workers replaced by AI.

Along with a push for efficiency through AI, responsible company leaders have also created plans for weathering a recession, Fetter says, even as J.P. Morgan Research has reduced the probability of a recession starting in 2025 from 60% to 40%.

“CEOs all have a recession plan that they probably have solidified by probably the end of Q1,” Fetter says. “Sadly, a lot of those recession plans basically were dusted off from the pandemic, but now with a new layer of AI.”

A shift in the workforce

Other IT employment experts see some of the same trends. Companies looking to grow are shifting away from mass hiring and toward selective scaling, Patrice Williams-Lindo, CEO of career coaching firm Career Nomad.

“Companies are trimming legacy roles while quietly hiring for new AI-augmented positions,” she says. “The ‘net job loss’ headline masks a deeper reallocation of labor — from operational maintenance to innovation hubs and AI integration roles.”

Williams-Lindo sees the impact of AI not only in replacing jobs, but also in displacing skill sets. Midlevel IT support, QA testing, and some software engineering jobs are increasingly automated, she says.

Over the long term, a new kind of workforce will emerge, she says.

“Tech layoffs are no longer just a market correction — they’re a quiet restructuring of the entire digital labor economy,” Williams-Lindo adds. “And the workers being cut? They’re often the very ones who built it.”

The irony of replacing workers with AI is that technology still needs employees to watch over it, she adds. “AI is creating a massive new demand for reskilled professionals who can train, manage, and govern these systems,” Williams-Lindo says. “Those who pivot into AI fluency and digital ethics will thrive. Those who don’t risk being left behind.”

IT professionals who survive the current environment will have to be adaptable, brand-visible, and AI-augmented, she says.

“We’re in a post-loyalty labor market,” Williams-Lindo adds. “The real question isn’t if AI is being used to cut jobs — it’s how leaders can use it to reimagine roles, upskill teams, and future-proof their workforce without erasing the human edge.”

The value of AI skills

Workers with “product intuition” and AI skills are now commanding the highest salaries, pointing toward a hybrid skillset, says Sam Wright, head of partnerships at job seeker site Huntr.co.

Willaims-Lindo and Talentfoot’s Fetter both call on IT workers to build their AI expertise, and Huntr.co’s data, collected from job hunters and job sites, reinforces that advice.

Still, the overall IT job market has cooled sharply since October, Wright says, even after the huge number of layoffs in 2024. More than half of US IT jobs are clustered in a few metro areas like Seattle and San Francisco, he notes.

Wright hasn’t yet seen a widespread effort to replace IT workers with AI, despite warnings from Fetter and Williams-Lindo.

“AI is being pushed as a growth driver more than a cost driver right now,” he says. “The idea is more productive not to cut the workforce. We are seeing employers covet employees that use AI to grow revenue.”

Other observers see AI-related layoffs coming. IT layoffs will continue through 2026, with sysadmins, QA testers, back-office IT, and mid-tier management jobs most at risk, says Nic Adams, CEO at automated security vendor 0rcus.

“Roles relying on routine, repetitive work or can be automated through LLMs, scripting, or RPA are on the chopping block,” he says. “Only technical specialists tied to critical infrastructure, AI systems, or offensive security have real insulation from these cuts.”

Entry-level security analysts, low-level tech support agents, manual QA testers, and network operations center monitoring technicians are especially at risk of being replaced by AI, he says. “AI tools are already handling detection, triage, and basic response faster than humans can keep in sync,” Adams says. “The more rules-driven the job, the more likely to permanently dissolve.”

While fears of recession and inconsistent US trade policy have driven some IT layoffs, the underlying catalyst is systemic automation, Adams adds.

“Enterprises demand leaner teams, higher velocity, and instant scale,” he says. “The bottom third of legacy teams are being displaced, only because of new business models taking shape. It’s not only for OPEX and cost savings.”