How AI Is Having an Effect on Earnings and Layoffs

AI is having a major impact on big tech companies—and not always the impact employees would like…

A recent round of tech earnings calls saw major companies like Microsoft, Google, and Meta displaying strong or better-than-expected results—and some of that growth was driven by AI.

In Microsoft’s case, Azure revenue was up 27% year-on-year and Microsoft said it was already generating new sales from its AI products.

Google was less specific about its AI plans, but committed to incorporating generative AI into its products moving forward.

Reports have surfaced that Meta is playing catch-up to retool its infrastructure for AI, but still saw an unexpected increase in sales in the past quarter.

But there’s another side to the coin…

All of these companies face enormous pressure from shareholders to get leaner. Some have conducted layoffs already, with more expected to come. And they’re all relying on AI to capture efficiencies.

We saw a stark example of this in practice with a recent announcement from Dropbox that they’re cutting staff by 16%, or 500 people.

One of the major reasons for the cuts?

Artificial intelligence.

Cofounder and CEO Drew Houston wrote in a letter to staff that the company needed to “act with urgency” to seize the opportunity presented by AI. But, to do that, the company needed a different mix of skills than it has today:

“In an ideal world, we’d simply shift people from one team to another. And we’ve done that wherever possible. However, our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development.”

What do these announcements mean for knowledge workers in marketing and business?

I turned to Marketing AI Institute founder/CEO Paul Roetzer for answers in Episode 45 of the Marketing AI Show.

Here’s what you should be thinking about…

1. Companies are under increasing pressure. “I do feel that given conversations I’ve been having with some bigger companies, there is going to be increasing pressure to find ways to be as efficient as possible,” says Roetzer.
2. …SaaS companies most of all. SaaS will likely be brutal, says Roetzer. He anticipates workforce impacts, especially on middle managers, product teams, and developers who don’t know how to build and use AI.
3. But it’s not all bad news in every industry. “I’m optimistic that in a lot of industries there’s going to be time to figure out how to redistribute these workforces,” says Roetzer. Not to mention, plenty of industries have current worker shortages, which AI may actually help with.
4. In many cases, talent will need to evolve, not be replaced. There is still a lack of AI-specific talent across many business functions. So, what Dropbox is attempting to do in replacing talent with AI savvy pros isn’t necessarily easy to do.
5. That presents opportunities for many knowledge workers. You have the opportunity to be the person in your organization who becomes AI-powered and helps the company move forward, says Roetzer. To start, take a couple weeks to develop a basic understanding of AI. Be the person who starts an internal AI council to figure AI out in the context of your company.

The bottom line: “If you're sitting in these bigger companies and you're wondering like, could I really be the person? The answer is yes,” says Roetzer.

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