The start of the year has already seen a flurry of layoff announcements in the tech sector, and analysts say this may be just the beginning.

Meta, Microsoft and Workday are among over 50 tech companies that have announced staff reductions so far this year, impacting a total of more than 13,000 workers, according to a tally by layoffs.fyi. 

“I anticipate that we’ll continue seeing job cuts in tech — unlikely at the levels that we saw in 2023 or last year, but I don’t think we’re quite through with it,” Andy Challenger, a senior vice president at outplacement firm Challenger, Gray and Christmas, said in an interview.

Sixty-two percent of tech CFOs say their organization is planning a layoff this year as the industry focuses on the goal of sustaining profitable growth, according to survey results unveiled Tuesday by Chicago, Illinois-based accounting, tax and advisory firm BDO.

Mix of job cuts, hiring on tap

Despite the planned job cuts, all respondents said their organizations will probably expand headcount this year.

Companies are shrinking some teams for the sake of efficiency, “while putting those dollars and resources that are saved into other areas,” Hank Galligan, BDO’s national technology industry leader, said in an interview.

IT topped the list of areas where tech firms are looking to hire more staff, according to the study. Financial management ranked in second place. Tech CFOs are “focused on profitable growth, so having a good measure of profitability and being able to measure that continually is important,” Galligan said.

Tech sector headcounts ballooned during the COVID-19 pandemic amid heightened demand for IT products and services. After massive layoffs in the last few years, the sector continues to lean on job cuts to boost efficiency and free up capital for purposes such as investing in artificial intelligence, according to a September report from New York-based consulting firm AlixPartners.

“These [AI] investments come at the expense of other strategic initiatives at a time when tech companies are already navigating a high-interest-rate environment, ongoing efforts to course-correct overhiring during the pandemic, and a deceleration in the market growth rate,” the report said. “Freeing up capital for AI and other growth initiatives will first mean trimming excess costs where feasible across the business.”

Earlier this month, enterprise software giant Workday announced plans to eliminate about 1,750 positions, or 8.5% of its workforce. The move is part of a restructuring plan intended to prioritize the company’s investments while advancing an “ongoing focus on durable growth,” according to a securities filing.

‘Difficult, but necessary, decision’

In a memo to staff that was included in the filing, Workday CEO Carl Eschenbach called the layoff a “difficult, but necessary, decision.”

“Companies everywhere are reimagining how work gets done, and the increasing demand for AI has the potential to drive a new era of growth for Workday,” he wrote. “This creates a massive opportunity for us, but we need to make some changes to better align our resources with our customers' evolving needs.” 

Workday said it expects to continue to hire in “key strategic areas and locations” throughout its fiscal year ending Jan. 31, 2026. 

In mid-January, Meta employees were informed by CEO Mark Zuckerberg about the company’s plan to cut about 5% of its workforce, with a focus on the lowest-performing staffers, according to a Bloomberg report. Zuckerberg made the announcement in an internal memo, saying that 2025 will “be an intense year” for the company, the report said.

Meanwhile, Business Insider reported in early January that Microsoft was planning an unspecified number of job cuts and was taking a “harder look” at under-performing employees as part of the effort.

Other major tech companies that have announced layoffs since the start of the year include Salesforce and Amazon.

Staff ‘right-sizing’ versus ‘remixing’

While the industry has seen rampant job cuts in recent years, the trend appears to be easing up. Last year, tech companies announced a total of 152,104 layoffs, compared with more than 260,000 in 2023, according to layoffs.fyi. And about 2,400 layoffs were announced by the sector during the first month of this year compared with over 34,000 during the same period a year earlier. 

The slowdown may reflect a shift away from tech layoffs driven primarily by the need to “right-size” bloated staffs, analysts said. “Now what you’re seeing is more remixing, based on, let’s say, the efficiency you might gain through investing in AI or some other technology,” Galligan said.

In the coming year, layoffs aren’t likely to return to peak levels absent a larger economic downturn, according to Challenger.

“It really was such a unique phenomenon following Covid,” he said. “Companies hired so many workers that they ended up not needing, so they had to make these huge reductions.”