Record Revenue, Rising Layoffs: A New Kind of Tech Paradox
The latest wave of tech layoffs 2024-style looks less like crisis management and more like an AI-driven reshuffle. Cloudflare is the clearest example: the internet infrastructure company is cutting about 1,100 roles, or 20% of its workforce, just as it reports its strongest quarter yet. Revenue hit USD 639.8 million (approx. RM2.95 billion), up 34% year-on-year, and its future contract backlog exceeds USD 2.5 billion (approx. RM11.53 billion). Yet leadership insists these Cloudflare job cuts are not classic cost-cutting, but a redesign for the “agentic AI” era, where autonomous AI agents reshape how work gets done. Similar moves at GitLab and GM show a broader tech industry restructuring in which strong financials no longer guarantee job security. Instead, companies are aggressively aligning organisations around AI capabilities, even if that means shedding thousands of roles that no longer fit their future operating models.
Cloudflare: When Jobs ‘Aren’t AI Enough’
Cloudflare’s leadership has been unusually explicit about the logic behind its layoffs. Internal data shows AI usage inside the company has surged more than 600% in three months, with employees across engineering, HR, finance and marketing running thousands of AI agent sessions daily. CEO Matthew Prince compared this shift to moving from manual tools to power tools: productivity for staff directly writing code or selling to customers has jumped so much that many support roles are now seen as misaligned with the company’s future. Management argues that in the agentic AI era, value will be created by fewer, more AI-augmented workers. Almost all software development is already AI-assisted, and autonomous agents now perform code reviews before deployment. The company plans to hire again, but with a sharp focus on professionals skilled at leveraging AI tools, underscoring how the AI skills gap is determining who stays, who goes, and who gets hired next.
GitLab and GM: Restructuring for AI, Not Just Cutting Costs
GitLab and GM are also trimming headcount while talking up AI transformation, but framing the changes carefully. GitLab has opened a voluntary separation window and plans to shrink its operational footprint by up to 30% in countries where it only has small teams. CEO Bill Staples insists the restructuring is “not an AI optimisation or cost cutting exercise”, but a shift away from an organisational shape “right for the last era and isn’t right for this one.” GitLab aims to flatten management layers, reorganise R&D into about 60 smaller teams and deeply embed AI into code planning, drafting, review, deployment and repair, leaving humans to provide architectural and directional oversight. Meanwhile, GM is reported to be cutting hundreds of salaried IT roles as it reevaluates how software and digital capabilities support its strategy. In both cases, AI is less a budget line and more the organising principle for what the next generation of roles should look like.
Flattened Hierarchies and the AI Skills Gap
Across the sector, companies are using AI as a catalyst to simplify structures. GitLab plans to remove layers of management and reshape its global footprint so it can “rewire” processes with AI at the core. Cloudflare is slimming down support roles and preserving only sales teams with direct revenue targets, betting that highly automated back-office workflows will demand far fewer people. This is where the AI skills gap bites: many roles being eliminated are not necessarily redundant in terms of workload, but in terms of AI readiness. Employers increasingly want staff who can orchestrate AI agents, interpret their outputs and design workflows around them. Those who cannot make that shift are disproportionately exposed. The message is clear: headcount is no longer a proxy for strength. In the age of agentic systems, tech firms value AI capability, agility and leverage over sheer numbers of employees.