The artificial intelligence boom is no longer just changing how companies build products. It is now dramatically reshaping how businesses hire, operate, and cut jobs. Cybersecurity giant Cloudflare has become the latest major company to announce sweeping layoffs tied directly to AI-driven restructuring.
The company said it will slash 20 per cent of its global workforce, affecting more than 1,100 employees, as it redesigns operations for what executives described as an “agentic AI era”.
The announcement comes amid a much wider wave of job cuts across the technology sector, where companies are increasingly replacing or restructuring traditional roles around automation and AI tools.
Why Cloudflare is cutting jobs
Cloudflare announced Thursday that it is reducing its workforce as part of a broader operational overhaul focused on AI adoption.
According to Reuters, the company had 5,156 full-time employees at the end of 2025.
In a memo to employees, Cloudflare executives insisted the layoffs were not related to worker performance.
“We want to be clear that this decision is not a reflection of the individual work or talent of those leaving us,” executives said.
“Instead, we are reimagining every internal process, team, and role across the company.”
Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn said the company was restructuring to function in an “agentic AI era”.
The company revealed that internal AI usage had surged more than 600 per cent in only three months, with teams across engineering, finance, HR and marketing now using AI agents extensively in daily operations.
Following the announcement, Cloudflare shares reportedly dropped more than 14 per cent in extended trading.
AI is rapidly changing hiring patterns
Cloudflare’s layoffs are part of a much larger trend spreading across industries worldwide.
Companies increasingly argue that AI tools are automating tasks once handled by large teams, allowing businesses to operate with fewer employees while restructuring around new technical demands.
According to layoff tracking platform Layoffs.fyi, more than 124,000 job cuts were reported in 2025 alone.
In just the first five months of 2026, over 93,000 jobs have reportedly been eliminated across 106 companies.
Business Insider reported that more than 100 companies have already filed WARN notices signalling additional job cuts this year.
Meanwhile, a survey by the World Economic Forum last year found that 41 per cent of companies globally expect workforce reductions over the next five years because of AI adoption.
Which companies are cutting jobs?
The layoffs extend far beyond one sector. Several major technology, finance, retail and software firms have announced workforce reductions in recent months as companies shift resources toward automation and AI investments.
Freshworks: Freshworks recently announced an 11 per cent workforce reduction affecting around 500 employees. The company described it as part of ongoing restructuring efforts.
Coinbase: Cryptocurrency exchange Coinbase said it would cut 14 per cent of its workforce, impacting fewer than 700 employees. CEO Brian Armstrong linked the move partly to the crypto market downturn and AI-driven restructuring.
Amazon: Amazon announced 16,000 corporate job cuts earlier this year after eliminating another 14,000 roles last year. The company said the reductions were aimed at “reducing layers, increasing ownership, and removing bureaucracy.”
Oracle: Oracle reportedly cut around 30,000 jobs globally in April, including major reductions in India.
The layoffs particularly affected technology functions as the company reassessed returns from AI investments.
Meta: Meta also announced plans to reduce roughly 10 per cent of its workforce while increasing spending on AI projects.
Indian IT firms: Major Indian IT firms including TCS, Infosys, Wipro, HCLTech and Tech Mahindra collectively reported nearly 7,000 net employee reductions during FY26.
Why companies are embracing AI so aggressively
Businesses increasingly view AI as both a cost-saving tool and a competitive necessity.
AI systems can now automate customer support, software development assistance, data analysis, content creation, HR processes and operational workflows that previously required large teams.
Executives across industries argue that companies must adapt quickly or risk becoming less competitive.
At the same time, many businesses are simplifying management structures and reducing organisational layers to accelerate decision-making.
Expedia, for example, told Business Insider that it was cutting jobs while simultaneously hiring for new skill areas better suited to future business needs.
“We are also simplifying our structure and reducing organisational layers to move faster and with more accountability,” an Expedia spokesperson said.
The growing anxiety around AI and jobs
The speed of these workforce changes is intensifying concerns about how AI will reshape global employment markets.
While AI is expected to create demand for specialised technical roles in fields like machine learning, fintech and big data, many traditional corporate roles are already being reduced or restructured.
Companies increasingly appear willing to trade workforce expansion for automation efficiency.
And with more firms redesigning operations around AI systems rather than human-heavy teams, the broader technology sector may only be at the beginning of a much larger transformation.