AI-Driven Layoffs: Wix and Other Tech Giants Cite Artificial Intelligence as Motivation for Workforce Reductions Amid ‘AI Washing’
Wix is cutting 20% of its workforce, citing AI adaptation and currency strain. This move aligns with a broader trend of tech firms using AI to justify layoffs, a strategy experts call "AI washing." Meanwhile, companies are increasingly favouring "disposable" contingent workers over traditional employees to maintain flexibility.
Wix has become the latest technology company to announce significant workforce reductions, confirming plans to cut approximately 20% of its staff. CEO Avishai Abrahami stated that the decision was driven by currency fluctuations and the company's requirement to adapt to the transformative impact of artificial intelligence. This announcement follows similar restructuring strategies recently employed by other major firms, including Block, Snap, and Atlassian.
Layoffs: The Rise of AI Washing in Corporate Restructuring
The integration of artificial intelligence is increasingly being utilised as a primary justification for corporate downsizing. Experts suggest this practice, often termed "AI washing," allows organisations to reframe negative news regarding job losses as a proactive commitment to innovation and efficiency. By attributing workforce reductions to technological shifts, companies can sometimes mitigate negative market reactions; for instance, Cisco saw its stock price rise by 13 per cent following its own announcement of 4,000 layoffs earlier this month. Meta Layoffs: Former Engineer Shares Lessons on Surviving Tech Job Cuts, Importance of Personal Branding and Financial Planning.
Paul Osterman, a professor emeritus at the MIT Sloan School of Management, argues that this rationale serves as a convenient narrative for management. According to Osterman, AI provides a platform for firms to shift the perceived responsibility for layoffs away from internal decision-making and onto technological necessity. He contends that companies have been pursuing flatter team structures for decades, but AI now offers a timely, albeit potentially performative, justification for these long-standing organisational goals.
The current surge in layoffs is occurring alongside a broader, multi-decade trend toward the use of "disposable workers," including contractors and freelancers. These contingent roles currently represent a significant portion of the workforce, offering companies the flexibility to scale staff numbers instantly while avoiding the costs associated with traditional employee benefits. Data from the Bureau of Labor Statistics indicates that the number of such workers has grown, rising from 3.8%of the workforce in 2017 to 4.3% by 2023. Wikipedia Volunteers Threaten Strike After Wikimedia Foundation’s Community Tech Team Layoffs Decision: Report.
While this model provides agility for employers, research suggests it creates systemic challenges for the workforce, often resulting in lower wages and decreased job satisfaction. Despite the current economic climate, Osterman maintains that the modern economy should not be resigned to a permanent state of precarious employment. He suggests that policymakers and industry leaders should instead focus on re-establishing the stable, high-wage employment systems that previously fostered broader economic prosperity.
(The above story first appeared on LatestLY on Jun 01, 2026 08:16 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
