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New Delhi: Big Tech is tightening its workforce again. Meta Platforms Inc. and Microsoft Corp. are considering job cuts and buyouts, which may affect up to 23,000 jobs. The actions are part of the drive into artificial intelligence and data centre infrastructure by both companies.

The recent announcements are indicative of a more general change in approach. Firms are reducing expenditure on conventional business activities but heavily investing in AI. Both companies are making moves to reduce operations and hold margins under increasing capital spending, according to internal memos obtained by Bloomberg.

Meta to cut 10% workforce, freeze hiring

Meta has informed the employees that it will retrench approximately 10 per cent of its workforce, or almost 8,000 employees. An internal memo quoted by Bloomberg states that the layoffs will start on May 20.

The company will also leave some 6,000 vacant positions unsatisfied. The decision, Chief People Officer Janelle Gale explained, is a part of the efforts to enhance efficiency and balance the increasing AI investments. Planned cuts had been previously reported by Reuters.

The employees of Meta had already prepared for layoffs. Cuts in 2020 have impacted such teams as Reality Labs. In her note Gale admitted that her decision was a matter of uncertainty, but it had to be done under the existing business priorities.

Microsoft offers large-scale buyouts in the US

Microsoft is following another path. In a memo, which was examined by Bloomberg, the company has declared voluntary buyouts of thousands of its US workers.

In the US, approximately 7 per cent of the Microsoft employees are eligible. This may impact approximately 8,750 employees out of approximately 125,000 employees in the country by June 2025. This marks the initial occasion when Microsoft has provided buyouts on these levels, an individual who is well versed with the issue informed Bloomberg.

The programme is aimed at employees whose age and years of service sum up to 70 and above. Not everyone is eligible, such as for senior positions or positions that are associated with sales incentives.

AI spending drives cost-cutting across big tech

These layoffs and buyouts coincide with the two firms spending more on artificial intelligence. Microsoft continues to build data centres worldwide and recently has made new investments in AI in Japan and Australia.

Record capital expenditure is also being predicted by Meta this year. The firm has been entering into multi-billion-dollar contracts with AI partners in the past few months.

According to industry analysts, this is an apparent trend. Tech giants are redistributing funds to AI and cutting down on other expenses. This change has already resulted in several waves of lay-offs throughout the industry over recent years.

MetA and Microsoft will announce quarterly earnings on April 29. Investors will be particularly attentive to AI expenditure and human resource policies.

The resultant developments may provide a better idea of the extent to which Big Tech is prepared to go to transform its workforce to finance the next stage of AI development.