How some of the biggest U.S. companies are using AI to cut workers

Artificial intelligence has emerged as a key software for companies to drive progress — and cut back labor prices —significantly as stress mounts for companies to stay aggressive.

Companies in industries starting from cloud software program to quick meals to e-commerce have internally deployed AI instruments to to enhance productiveness, buyer expertise and provide chains. AI can be main to much less reliance on human labor in some areas, particularly entry level jobs and positions tied to automation and guide duties.

Unemployment has risen this yr particularly amongst younger tech workers whose expertise overlap with AI fashions, in accordance to Goldman Sachs chief U.S. economist Jan Hatzius.

“Although aggregate labor market impacts from generative AI remain limited, we are starting to see evidence of labor demand hits in the most AI-exposed industries,” Hatzius wrote in a July 25 word to purchasers. “Employment growth has turned negative in marketing consulting, call centers, graphic design, web search and software development, and the tech sector’s employment share has declined below its long-run trend.”

To be certain, it is exhausting to quantify the precise impact AI is having on labor at this stage of the tech cycle. One approach to perceive the development is by assessing commentary made by the prime executives at massive employers and high-growth corporations.

CNBC compiled commentary from administration at companies starting from McDonald’s to Amazon to Palo Alto Networks, on how internally deployed AI instruments and brokers are getting used to enhance productiveness, buyer expertise, provide chains and probably headcount.

The remarks present main tech and software program companies are using AI to cut away at labor wants and enhance productiveness.

Microsoft, for one, stated it’s saving tons of of thousands and thousands of {dollars} a yr simply by leveraging AI for help features. It added that “you don’t need human interaction” to make these roles extra productive. PayPal’s “PayPal Assistant” customer support bot is already slicing down cellphone calls and energetic occasions, the firm’s CEO stated earlier this yr.

According to Deutsche Bank analyst Brad Zelnick, the predominant AI use circumstances from software program companies appear to be on developer productiveness, customer support and help, in addition to vendor effectivity — which refers to how an organization’s gross sales income compares to the assets they used. Software corporations are additionally more and more citing the use of AI throughout features comparable to finance and human relations, he added.

“While some teams have been more explicit about labor savings (~50% of companies that have discussed internal AI use have mentioned headcount rationalization), many have noted meaningful improvement in efficiency which over time should drive labor savings or at least hiring at a slower rate,” Zelnick stated in an Aug. 6 word to purchasers. He highlighted Palo Alto Networks, CrowdStrike, Shopify, Intuit and Microsoft as some standout names that are leveraging AI in methods he stated “should support an ability to improve incremental margins.”

“If software companies are cutting/slowing headcount, we imagine it will be similar across industries and seat-based models will continue to be questioned even if they are able to price for the value they are creating near term,” Zelnick added.

Robotics continues to be a magnet for transport and e-commerce companies that are wanting to cut labor prices.

UPS’ chief govt stated throughout the firm’s second-quarter earnings name in May that higher use of automation and robotics will lead the firm “to become less reliant on labor.” Amazon CEO Andy Jassy stated in July that the firm makes use of greater than 1 million robots throughout its services, which he stated are “improving cost efficiencies” and giving clients quicker supply instances and decrease prices.

To be certain, companies are choosing cautious messaging round AI and its labor implications.

Starbucks is using AI in its order and provide chain administration processes — comparable to with its “Green Dot Assist” platform made with Microsoft Azure’s OpenAI — however has thus far framed the expertise as being a complement to its baristas. Amazon’s Jassy govt has stated robots are lessening the quantity of bodily demanding duties for its staff members, making operations safer.

An extended-term hiring cycle in ‘high-impact areas’

This yr has been robust for job seekers, with the market marred by hiring freezes, broader financial issues and an entry-level hiring squeeze. But in the long term, some on the Street say that AI will domesticate extra employment alternatives relatively than lead to widespread layoffs.

“We remain skeptical that AI will lead to large employment reductions over the next decade, primarily because AI-related innovation will create new work opportunities that help offset job losses from automation,” Goldman’s Hatzius stated.

Job cuts throughout main tech giants seen since final yr moreso underscore a correction since their hiring spree throughout the Covid-19 pandemic, in accordance to Jefferies analyst Brent Thill.

Job progress throughout software program and web companies has been robust in 2025, albeit under peak ranges in 2021 and early 2022, Jefferies famous. Only 23% of tech companies in the agency’s protection has introduced layoffs this yr, down from 37% in 2024.

“Overall, we view the current layoff cadence as a sign that the industry is nearing the end of its post-COVID workforce re-calibration,” Thill stated in a July word to purchasers. “AI is driving efficiency while also fueling a new hiring cycle. While AI continues to drive efficiencies and reshape workforce needs, particularly in automating lower-skilled roles, we are also seeing selective hiring in high-impact areas.”