54% of tech hiring managers expect layoffs in 2025

54% of tech hiring managers say their companies are likely to conduct layoffs within the next year, and 45% say employees whose roles can be replaced by AI are most likely to be let go, according to a new study by General Assembly.

“We’re on the precipice of an unprecedented skills crisis,” said Daniele Grassi, CEO of General Assembly. “Businesses are ramping up AI investments and reducing headcount in the name of productivity, but they are creating a widening skills gap that will ultimately slow transformation. It’s time to get AI skills to every employee.”

Key findings from the survey of IT hiring managers and HR professionals who hire tech talent at companies with at least 200 employees include:

Employees with easily automated jobs, outdated skills most likely to be let go

Employees likely to be let go during staff reductions include those who can be replaced by AI/automation (according to 45% of tech hiring managers), those with outdated skill sets (44%), those who underperform compared to peers (41%), those who work on projects that have been deprioritized (33%) and those who work remotely (22%).

Employees most likely to be retained are those with high performance ratings, according to 62% of tech hiring managers, as well as employees deemed “top talent” (58%), employees with AI-related skills (57%), employees who work on priority projects (54%), long-tenured employees (36%) and those who work in the office (27%).

69% say it’s very likely that advancements in AI will create demand for new roles. 76% of tech hiring leaders admit it’s likely that there’s potential to upskill or reskill the employees slated for layoffs.

AI development, cybersecurity, data analysis are most prized technical skills

AI development was the highest-ranked technical skillset prioritized by hiring managers (ranked #1 by 24%), followed by cybersecurity (20%) and data analysis (14%).

Regarding soft skills, strategic thinking was most likely to be prioritized as one of the top three in-demand skills, followed by problem solving and adaptability.

AI development, proficiency with AI tools for productivity and cybersecurity are most lacking skills

25% of hiring managers said AI development was the #1 technical skill most lacking with existing talent, followed by proficiency with AI tools for productivity (15%) and cybersecurity (15%).

Adaptability, strategic thinking and problem solving were the three most lacking soft skills.

IT teams are leading AI transformation, and still hiring software engineers

• 65% of tech hiring managers report that IT is primarily responsible for managing the rollout of AI and automation at their organizations, followed by HR (17%).
• 42% of tech hiring managers say they are hiring more software engineers due to advances in AI, while 11% are looking to reduce headcount.
• 31% say their organizations have not conducted a formal assessment of existing talent and skills gaps related to AI and automation.
• 93% say their company either plans to invest or already invests in upskilling or reskilling employees in roles subject to automation.