Oracle to shed developers as it brings in AI tools

Oracle is set to shed software developers as it enters a new era: one where AI is an integral part of its product portfolio.

However, the company is emphasizing that this move is not due to the so-called SaaSpocalypse, where new AI implementations damage the rollout of traditional SaaS operations. Instead, it is seeking to improve its internal development processes.

“I do think that AI tools and their coding capabilities would be a threat if we were not adopting them, but we are — and very rapidly,” said Oracle CEO Mike Sicilia, during the company’s presentation of its quarterly results. “Oracle Corporation is using the best AI coding tools and the best developers not only to accelerate our SaaS business, but to deliver solutions that enable entire ecosystems across numerous industries.”

However, the company has made it clear that there will be some hefty job losses along the way. In January this year, a report from investment bank TD Cowen predicted that the company could be looking at cutting 30,000 jobs as it struggles to find funding for data center development. Oracle had issued a warning of this a few months earlier, when it produced a financial statement talking of $1.6 billion restructuring costs, mainly related to “employment severance and contract termination”.

The company also secured another $50 billion in debt this quarter, to fund development of new data centers to drive AI innovation.

Customers should look out for changes in the company’s approach, said Sanchit Vir Gogia, CEO of Greyhound Research. “Oracle is currently in the middle of a capital-intensive infrastructure cycle tied to the expansion of AI data centers,” he said. “When a vendor is investing tens of billions of dollars into a new growth engine, other parts of the portfolio often experience operational optimization. This can manifest through workforce restructuring, and tighter prioritization of product roadmap.”

However, the company insists that its customers will not be adversely affected by these changes. “The use of AI coding tools inside Oracle Corporation is enabling smaller engineering teams to deliver more complete solutions to our customers more quickly,” said Sicilia. “We are building brand new SaaS products using AI and also embedding AI agents right into our existing applications and suites.”

A strategic pivot

Oracle’s decision to restructure engineering should be interpreted by customers as a strategic pivot rather than simply a workforce reduction story, Gogia said. Its most recent financial results show that the company’s growth is now driven by cloud and AI. This imbalance matters because it reveals where Oracle’s management attention, capital allocation, and engineering energy will be directed in the coming years.

But what does this mean for Oracle customers?

Scott Bickley, advisory fellow at Info-Tech Research Group, said, “Oracle’s support base is stagnant, which indicates that customers may be leaving the legacy platforms for cloud-based solutions — some moving to Oracle, some not. Oracle’s focus has shifted to AI infrastructure as the major revenue growth driver, rightfully so, and in the process, is leveraging AI to more efficiently build its own software.”

Gogia added that customers would see some change, but very gradually. “The immediate risk is not that Oracle products will suddenly degrade,” he said. “Enterprise platforms with large installed bases rarely collapse overnight. The more realistic concern is gradual changes in innovation velocity. Some product areas may accelerate, while others receive fewer enhancements or slower release cycles. Customers that depend heavily on Oracle databases, enterprise applications, or middleware should therefore watch closely whether those products remain core strategic priorities inside Oracle’s long-term roadmap.”

Beware the support discontinuity

Info-Tech’s Bickley agreed that customers of Oracle’s established software products should be looking to make changes to the way that they deal with the company. “Oracle customers should lock in deals for multi-year terms, as the current environment for software is highly inflationary, with prices driven higher to support these AI investments,” he said. “ERP may soon be viewed as a core commodity, whereby industry vertical specialization is AI-created around the core. This will shift commercial constructs to a consumption model requiring FinOps discipline to manage costs effectively.”

Gogia also warned about one effect of the planned layoffs: “Customers should monitor support and engineering continuity,” he said. “When experienced developers leave during restructuring cycles, organizations sometimes lose institutional knowledge about legacy systems. Enterprise software environments are complex and deeply integrated into business operations. AI coding tools can assist engineers, but they do not automatically replace years of product expertise or architecture familiarity.”