Companies Are Blaming AI for Job Cuts. Critics Say It's a 'Good Excuse'

As tech layoffs pile up in 2025 - over 180,000 jobs cut and counting - a narrative has emerged: AI is replacing human workers at scale.

CEOs at IBM, Microsoft, and Amazon have explicitly linked workforce reductions to AI capabilities. "We will need fewer people," says Amazon's CEO. "AI agents replaced hundreds of HR workers," admits IBM's chief executive.

But when researchers survey companies about why they're actually cutting jobs, only 1% cite AI as the reason.

So what's going on? Are companies genuinely deploying AI to replace workers? Or is AI just a convenient excuse for cost-cutting that would have happened anyway?

The uncomfortable truth: It's probably both.

The Survey That Doesn't Add Up

According to recent surveys of services firms:

• Only 1% reported AI as the reason for laying off workers in the past six months
• However, 12% said AI made them hire fewer workers in 2025
• The gap between public AI rhetoric and official layoff reasons is enormous

This disconnect has led critics to argue that companies are "scapegoating" AI - using it as a convenient excuse for layoffs that are really about stock prices, executive compensation, and cost-cutting.

"AI is becoming a good excuse for firms looking to downsize," one analyst told CNBC.

And there's truth to that criticism. Blaming AI for layoffs has advantages for corporate leadership:

• It sounds forward-thinking rather than just cost-cutting
• It shifts blame from executives to inevitable technological progress
• It positions the company as innovating rather than struggling
• It provides cover for decisions that are really about profitability

But here's the problem with dismissing AI as "just an excuse": The capabilities are real. AI tools actually are doing work that used to require humans. And companies are absolutely taking advantage of that.

Why Companies Don't Officially Cite AI

When IBM's CEO says AI agents replaced hundreds of HR workers, and then IBM cuts thousands of additional jobs, why does the company not officially attribute those layoffs to AI?

Several reasons:

• PR Management: "AI took your job" creates worse headlines than "strategic restructuring"
• Legal Concerns: Explicitly admitting AI displacement might invite lawsuits or regulatory scrutiny
• Employee Morale: Remaining workers are terrified that they're next - better to keep the language vague
• Multi-Factor Reality: Most layoffs involve multiple factors, and AI is just one piece

When Amazon cut 14,000+ corporate jobs, the official reasons included:

• Pandemic-era overhiring corrections
• Organizational restructuring with "fewer layers"
• Strategic realignment toward growth areas

Only later did CEO Andrew Jassy explicitly state: "As we roll out more Generative AI and agents, we will need fewer people doing some of the jobs that are being done today."

The official reason and the actual driver are different. Companies have learned that ambiguous corporate language generates less backlash than admitting AI is eliminating jobs.

The 12% Who Aren't Hiring

Here's the more telling statistic: 12% of services firms said AI made them hire fewer workers in 2025.

This is arguably more important than the 1% who cite AI for layoffs, because it represents a different type of workforce impact: jobs that never get created in the first place.

These don't show up in layoff announcements. There's no press release. No outraged workers. No media coverage. Just positions that would have existed but now don't, because AI is handling that work.

The impact accumulates invisibly:

• A marketing team that would have hired 5 new people hires 2 with AI tools instead
• A software team that needed 10 junior developers needs only 3 because AI writes code
• An operations department that would have added 8 analysts adds 2 because AI handles data processing

Each company reduces hiring by small amounts. Multiply that across thousands of companies, and you get a significant employment impact that never shows up in "layoff" statistics.

What the Numbers Are Missing

Both the 1% and 12% figures likely understate AI's actual workforce impact because they miss several categories:

• Contractor Reductions: Cutting freelancers and contractors doesn't register the same way as employee layoffs
• Attrition Without Replacement: When someone quits or retires, leaving the position unfilled because AI handles the work
• Hiring Freezes: Blanket policies that stop all hiring while AI capabilities are assessed
• Slower Headcount Growth: Companies growing revenue 20% while headcount grows only 5% because AI provides leverage

Microsoft CEO Satya Nadella's recent comment captures this perfectly: Microsoft will resume hiring, but "with a lot more leverage" because AI amplifies individual productivity. Translation: We'll hire far fewer people per unit of revenue because AI tools multiply output.

That's workforce displacement, but it doesn't show up as a layoff. It shows up as slower hiring growth.

The 'Good Excuse' That's Also Real

So are companies using AI as a convenient excuse for cost-cutting? Yes, absolutely. Some firms are exploiting AI rhetoric to justify layoffs that are really about:

• Boosting stock prices through cost reductions
• Meeting quarterly earnings targets
• Funding executive compensation packages
• Correcting previous overhiring without admitting the mistake

But is AI also genuinely enabling companies to operate with fewer employees? Yes, that's also true.

IBM's CEO didn't make up the fact that AI agents replaced hundreds of HR workers. Microsoft's CEO isn't lying when he says AI writes 30% of their code. Amazon's CEO isn't exaggerating when he states they'll need fewer people as AI capabilities expand.

These capabilities are real. And companies are using them to reduce headcount while maintaining or increasing output.

The disconnect is that companies emphasize AI when talking to investors (to signal innovation) but downplay it when talking to employees and the public (to avoid backlash).

What This Means Going Forward

The debate over whether AI is a real driver of layoffs or just a convenient excuse misses the point: It's a bit of both, and both dynamics are accelerating.

Some companies will absolutely exploit AI as cover for cost-cutting that was going to happen anyway. They'll blame "automation" while really just trying to boost margins and stock prices.

But other companies are genuinely restructuring around AI capabilities that let them operate with dramatically smaller workforces. They're deploying AI tools that really do eliminate the need for human workers in specific roles.

And many companies are doing both simultaneously: using AI capabilities as justification for cost-cutting they wanted to do anyway.

For workers, the distinction doesn't matter much. Whether you lost your job because AI actually replaced you or because executives used AI as an excuse for cost-cutting, the result is the same: You're unemployed.

The Honest Assessment

Only 1% of companies officially cite AI as the reason for layoffs. But 12% say AI reduced their hiring. CEOs at major corporations explicitly state AI is letting them operate with fewer people. And 180,000+ tech workers have been laid off in 2025 with AI frequently mentioned as a contributing factor.

The truth is nuanced: AI is both a real capability that enables workforce reductions and a convenient excuse for cost-cutting.

Some companies are genuinely replacing human workers with AI tools that can do the same work faster and cheaper. Other companies are using AI as convenient cover for layoffs that are really about profitability and stock prices. And most companies are somewhere in between - taking advantage of real AI capabilities while also using them as justification for cuts they wanted to make anyway.

Critics are right that AI is being exploited as an excuse. But they're wrong to dismiss AI's actual displacement effect.

The capabilities are real. The workforce impact is real. And whether companies are being honest about their motivations or using AI as convenient cover, the result for workers is the same: Fewer jobs. Higher skill requirements. More output expected per person.

AI might be a "good excuse" for some companies. But for the workers losing their jobs or watching positions disappear, the distinction between a real reason and a good excuse doesn't matter much.