Tech firms rethink strategy to replace human workers with AI

Technology companies are readjusting their goals of operating with smaller teams and leveraging artificial intelligence (AI) instead of employing human workers, with tech giant Meta recently shelving its further restructuring plan after it failed to reach its efficiency goals.

Meta had planned to lay off up to 60% of workers in some teams and delegate a significant portion of tasks to AI agents, but when the firm did not meet its expected goals, it decided to call off the plan.

Meta halted planned further cuts following the first wave of layoffs as internal data showed AI systems failed to deliver and technical issues increased, along with the time workers spent resolving these issues.

Mark Zuckerberg, CEO of Meta, later said there would be no new company-wide layoffs this year.

Similarly, Swedish fintech firm Klarna began hiring human staff again due to service quality issues after it had said its AI-powered customer service system could handle the work of hundreds of workers and largely stopped hiring.

Klarna CEO Sebastian Siemiatkowski said the firm had focused too much on cost-cutting, while the firm’s new model involves AI continuing to handle routine tasks while allowing customers to talk to human customer service representatives when necessary.

Companies are not fully abandoning AI, but expectations that technology will replace human workers are shifting.

SignalFire’s 2026 tech employment report showed that total hiring at major tech firms fell 25% compared with 2019, while the decline in software engineering hires was limited to 11%, and the share of software engineers in total hiring rose from 46% to 55%.

Employment in AI and machine learning engineering grew, but positions in design, marketing, and product management saw steeper declines.

The Stanford Digital Economy Lab found no evidence of widespread AI-led job losses across the economy, but the lab’s report, based on US payroll data, found that employment among those aged 22-25 was weaker in occupations highly exposed to AI.

Researchers of the report said a significant portion of this effect stems from firms hiring fewer entry-level workers rather than from wider layoffs.

Meanwhile, downsizing in the tech sector continues as investments in AI rise.

Recent examples of Meta and Klarna, alongside recent hiring data, show that companies are not relying so much on AI to replace human workers entirely but rather to build smaller and more technical teams that use AI.

These recent examples also reveal clear limits to deriving productivity gains from AI by reducing the number of workers.