Oracle’s AI-based layoffs might not be over

After months of hypothesis in regards to the scope of Oracle’s layoffs, the corporate has confirmed it minimize 21,000 staff, or 13% of its workforce, over the previous yr. In its annual report this week for the fiscal yr ending Might 31, the corporate stated the layoffs had been primarily the results of elevated funding in AI as a part of a broader restructuring plan.

Oracle additionally signaled within the report that its AI-based layoffs might not be over, stating that “adoption and deployment of AI applied sciences throughout our operations have resulted, and should proceed to end result, in reductions to our workforce.”

IT groups want new expertise within the AI period

Jim Frey, principal analyst at Omdia, forecasts that extra AI-based layoffs are to come back as main tech distributors proceed to ramp up their AI deployments. IT professionals who need to keep away from layoffs might want to upskill to navigate the AI period, he added. 

“These macro shifts additional illuminate the necessity for IT professionals in any respect ranges to interact with AI applied sciences, discover ways to use them and take an energetic position in initiatives to roll them out for the organizations they assist at any time when attainable,” Frey stated. 

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In its annual report, Oracle acknowledged that staff with enterprise, product growth or technical experience mixed with robust AI expertise are important however troublesome to come back by: “… recruiting, hiring and retaining staff with experience within the AI computing business has grow to be more and more troublesome … implementation of AI instruments could require new expertise and capabilities, and we might not be profitable in reskilling present staff.”

The annual report does not disclose which roles have been affected by layoffs, however the firm stated it’s leaning on AI for automation, database administration, course of optimization, extra environment friendly enterprise processes and to scale back labor prices, underscoring how broadly Oracle is utilizing AI. 

Rising operational prices are dangerous for headcount

Whereas Oracle attributes latest layoffs on to AI adoption, the annual report factors to extra enterprise pressures that probably contributed to workforce reductions. To cut back prices and enhance effectivity, Oracle is restructuring to speculate extra in cloud infrastructure, cloud functions and AI providers. 

Oracle’s capex investments in cloud and AI lately have additionally elevated working prices, stated Baron Fung, a vp at analyst agency Dell’Oro Group. 

Complete usually accepted accounting ideas working bills for Oracle elevated by $7 billion in reported forex in fiscal 2026 in contrast with the earlier fiscal yr, pushed largely by a $6.0 billion improve in cloud and software program bills. As well as, a $412 million improve in R&D bills was attributed primarily elevated employee-related and laptop gear bills.

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“Operational bills are rising rapidly, doubtlessly negatively impacting profitability and money stream,” Fung stated. 

He defined that the rise in operational bills for Oracle is usually associated to:

“Usually, chopping headcount is essentially the most direct method to offset these rising prices,” Fung stated.