Big Tech AI layoffs will reshape the jobs market. How should workers respond?
"Talent displaced from large enterprises will intensify competition for roles at mid-sized and smaller organisations."
In 2026, AI-driven job cuts will accelerate. In fact, new research shows that one in six employers expect to shrink their workforces by implementing AI in the next year. To name just a few examples, McKinsey has reportedly begun discussions to reduce non-client-facing teams by as much as 10% while Salesforce recently cut 4,000 customer service roles, citing that AI agents can now perform much of that work.
These moves reflect longer-term predictions about how AI will reshape the labour market. Up to 3 million low-skilled jobs may disappear in the UK by 2035, but the same analysis also forecasts the creation of 2.3 million new roles by 2035. We found concurring data through our own AI Skills Report, which found that 44% of UK businesses have added roles due to the growth from AI. This points to a complex combination of changing roles, job displacement, and labor market reconfiguration.
Though it must be noted that not all businesses will shrink their headcounts at the same rate. The impact will be most pronounced among large enterprises. Today, one in four (26%) employers in large private sector firms expect to shrink their workforces over the next year, compared with 17% in the private sector overall and 20% in the public sector.
For the wider workforce, this has important implications. Talent displaced from large enterprises will not disappear, it will move into the broader job market, intensifying competition for roles at mid-sized and smaller organisations, and creating opportunities for employers that are in search of new skills. In this environment, the employers that are best at validating incoming skills and keeping current talent engaged will have a significant competitive advantage as they accelerate AI adoption.
Job cuts are coming- starting at large enterprises
Many organisations have already announced AI-driven job cuts, and the reasons for doing so differ case by case. For example, Amazon confirmed plans to cut roughly 14,000 corporate roles, citing the need to operate more leanly to seize the opportunity provided by AI. Similarly, Block (formerly Square), laid off 40% of its staff, also due to AI advancements replacing workflows. Meanwhile, McKinsey suggests that the whole banking industry could cut 10% of jobs by 2030 as banks rush to secure the savings promised by AI and move more operations online.
The underlying pattern is that these job cuts are concentrated in large enterprises because, typically, AI maturity increases with company size. Large organisations have the capital, data and operational scale to deploy AI across entire functions. A Forbes Study found that 73% of companies with revenue above $15 billion use AI enterprise-wide, whereas only 22% of $1billion to $4.9 billion companies do so at that scale.
Employee engagement may suffer as layoffs accelerate
Workers are clearly anxious about AI potentially replacing them. Seventy percent of employees already believe their job is at risk due to AI. Employees at small- to mid-sized companies may see the news of layoffs at larger organizations as further cause to worry about their own job security. The fear of automation and talent-flooded employment markets could dampen morale and productivity. Employers can combat this by offering workers a way to ensure their skills outcompete those vying for jobs, thus keeping those employees excited about opportunities at their organisations and engaged in their work.
The UK labour market is already under strain with employers reporting skills shortages alongside cautious hiring. The UK unemployment rate rose to around 5.1% in late 2025, the highest rate since early 2021. As more experienced talent moves downstream from large enterprises, competition for a limited number of roles will intensify, raising the bar for what it takes to stand out.
READ MORE: "Your role has been eliminated!": What it's like to lose your corporate job to AI
Upskilling as a lever for agency
Upskilling is already a critical business priority in the UK as organisations seek to close widening AI skills gaps. Our research found that 95% of business leaders are working to create a culture of learning around technology skills while the same amount are using AI skills as a hiring factor. But investment in upskilling serves another, often overlooked, purpose.
Upskilling restores a sense of agency. It shifts AI from something that happens to employees into something they can use to work smarter, replacing anxiety with confidence. Organisations that build a culture of continuous learning are better positioned to redeploy talent internally, retain high performers, and adapt as roles evolve. These organisations will also reap financial benefits because replacing existing staff is 1.6 times more expensive than upskilling existing staff.
Learning is the new job security
In a more crowded labour market, experience alone will no longer be enough to stand out. Nearly half (47%) of UK executives say AI skills are a strongly preferred qualification in recruitment today, and only 6% do not factor in AI skills when hiring.
Rather than worrying about being replaced, workers should be focused on keeping their skills sharp and ensuring they are well equipped to work alongside AI in today’s job market. Upskilling becomes a source of competitive advantage, signalling adaptability, curiosity and readiness to evolve as roles change. In an AI-shaped jobs market, learning is no longer simply about progression, it is about employability.
READ MORE: Which jobs are safe from AI? OpenAI boss Sam Altman shares a rare sunbeam of optimism
The critical role of skills assessments
Learning for the sake of learning doesn’t benefit employees or employers. Skills assessments are critical to making learning programs applicable to employees and strategically valuable to employers. These assessments allow organisations to benchmark skills inventories at scale so that learning programs can effectively address skills gaps that inhibit technology implementation. Employees will see that they are growing in a way that positions them for success at the company, and employers will unlock new talent in the most cost efficient way.
When it makes sense to absorb some of the excess talent that enters the labor market this year, skills assessments can also help employers validate the authenticity of skills that job applicants are marketing.
Adapting to the new job market
While employees at small and mid-sized organisations may not yet be automated out of their roles, they will feel the ripple effects of cuts at large enterprises. Talent displaced from large firms will intensify competition across the wider job market. For both employers looking to retain confidence and individuals seeking to stay competitive, upskilling is the most effective response.
For workers, this influx should serve as a wake-up call: without investing in upskilling, they risk falling behind more capable competitors or being unable to fully leverage new hires. Ensuring existing employees can operate at the same level of AI maturity is therefore not just a talent issue, but a critical business priority.
Erin Gajdalo is CEO of Pluralsight
