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Technology companies are adjusting plans to operate with smaller teams and rely on artificial intelligence in place of human workers, after some firms found the approach fell short of expectations.
Meta, the U.S.-based technology company, recently shelved a further restructuring plan after it failed to meet its efficiency goals, while Swedish fintech firm Klarna has resumed hiring human staff following complaints about service quality.
Meta had planned to lay off up to 60% of workers in some teams and shift a significant portion of tasks to AI agents. After the company did not meet its expected goals, it decided to call off the plan.
Meta halted additional cuts following its first wave of layoffs, after internal data showed AI systems failed to deliver as expected and technical issues increased, along with the time employees spent resolving them.
Mark Zuckerberg, chief executive officer of Meta, later said there would be no new company-wide layoffs this year.
Klarna has also begun rehiring human employees due to service quality issues, after previously stating its AI-powered customer service system could handle the work of hundreds of workers and largely halting new hires.
Sebastian Siemiatkowski, chief executive officer of Klarna, said the firm had focused too much on cost-cutting. Under its revised model, AI continues to handle routine tasks while customers can speak with human customer service representatives when necessary.
Companies are not abandoning AI use altogether, but expectations that the technology will fully replace human workers are shifting.
A 2026 tech employment report by SignalFire showed total hiring at major technology firms fell 25% compared with 2019, while the decline in software engineering hires was limited to 11%.
The share of software engineers in total hiring rose from 46% to 55% over the same period.
Employment in AI and machine learning engineering grew, while positions in design, marketing, and product management saw steeper declines.
The Stanford Digital Economy Lab found no evidence of widespread AI-led job losses across the economy. Based on US payroll data, the lab's report found that employment among workers aged 22 to 25 was weaker in occupations highly exposed to AI.
Researchers said a significant portion of this effect stems from firms hiring fewer entry-level workers rather than from broader layoffs.
Downsizing in the technology sector continues alongside rising investment in AI.
The examples of Meta and Klarna, together with recent hiring data, indicate that companies are relying less on AI to fully replace human workers and instead are building smaller, more technical teams that use the technology.
The examples also point to limits in achieving productivity gains from AI through workforce reductions alone.
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