“The massive layoffs aren’t because of AI; they’re a result of aggressive COVID-era overhiring.” IBM CEO on tech layoffs in 2025

In a tech industry rattled by mass layoffs, automation anxiety, and a looming white-collar recession, IBM CEO Arvind Krishna has offered a counter-narrative: “AI is not the reason behind tech layoffs. Pandemic over-hiring is.” 

Business Today first reported the statement, but the broader economic and technological forces.

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Krishna’s Core Claim

According to Krishna, tech giants expanded aggressively during the pandemic as remote work improved productivity, cloud demand spiked, and companies raced to secure talent in a frenzied, venture-funded boom. The expectation was a long, uninterrupted digital surge.

But by 2024–2025, demand normalized, leaving companies with headcounts far above sustainable levels.

The thesis partially aligns with data recorded by the World Economic Forum and McKinsey of a near 180% surge in tech hiring from 2020–2022, much of it speculative.

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Companies going through correction 

The head of IBM indicated that the businesses are going through a process of natural correction.

“There isn’t a complete optimization in a business. In engineering terms, it’s an underdamped system. When there’s a demand, it goes above. Now, it has to correct. Probably it’ll go below what’s needed and then it will hit the correct equilibrium depending on market demand and growth,”highlighted Krishna.

Krishna predicts job displacement of up to 10% in the coming years, which he claims would not be catastrophic, but significant. 

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