Docler joins long list of global tech layoffs

Adult entertainment company Docler is only the latest in a string of tech businesses to lay off staff following rapid expansion in previous years, with global job losses estimated at more than 20,000 this year alone.  

The Docler group, which also includes Byborg Enterprises, at its Budapest office is firing 200 staff, saying in a statement that it would be turning to AI solutions instead. No information has been made public about the number of layoffs at its Luxembourg office.

“It’s probably just starting,” said Boris Debić, a former Google executive, about shifts in the industry and the repercussions of AI. “There’s going to be a lot more impact, I think.”

Tech expansion created huge demand for developers, IT workers and other computer science graduates. Average US tech salaries ballooned to six figures.

That was compounded by the effects of the Covid-19 pandemic, which “represented a big opportunity for tech companies”, said Luca Ratti, associate professor in European and comparative labour law at the University of Luxembourg.

The “second phase” of the pandemic in 2021 saw a lot of hiring in the sector, Ratti said in an interview with the Luxembourg Times, adding that a lot of those hired were recruited as freelance contractors, making it easier for companies to cut back when required.

That time has come.

Mass layoffs

Job losses in the industry so far this year – up to the end of July – amount to more than 22,000 alone, according to news website TechCrunch, following more than 150,000 job cuts last year. That includes some of the largest tech firms, such as Google, Meta and TikTok.

In July, Microsoft, which has invested heavily in AI use, announced it second major wave of layoffs this year, with fresh cuts which are set to impact about 9,000 workers.

Amazon also announced last month that it is cutting jobs in its cloud-computing division, just weeks after Chief Executive Officer Andy Jassy said he expected the firm’s workforce to decline in the next few years as the company uses artificial intelligence to handle more tasks.

That comes after the company laid off around 27,000 employees in successive waves starting in 2022.

One of Luxembourg’s largest employers, the number of staff at Amazon’s Luxembourg office reduced from 4,570 in 2023 to 4,370, according to data released by statistics office Statec at the start of this year.

Major firms in the US will generally find it a more straightforward process to cull employee numbers than their European counterparts, said Ratti. “The European labour market is totally different to the US due to EU rules. It is certainly more difficult to reduce jobs in Europe.”

Collective redundancies in Luxembourg require a so-called social plan. That includes the dismissal of at least seven employees over a 30-day period or at least 15 staff over 90 days.

The procedure must be declared to national job centre Adem, which declined to comment whether Docler had filed for collective redundancies.

Role of AI

As to what had sparked the recent downturn in the sector, Ratti said: “I am not so sure it is easy to connect the dots directly. It is a multi-factoral thing.”

The increasing use of AI is one factor in the tech sector’s woes, Ratti said, adding that “tech companies are investing in AI, they are at the forefront of it.”

Docler’s restructuring includes automating key workflows and deploying AI-powered tools in selected departments, the company said.

An employee in Luxembourg in an email, however, blamed the layoffs on “overambitious expansion, underperforming acquisitions, and growing financial strain.” Writing anonymously as he is still works for the company, he called the redundancies a “painful reckoning”, with AI used as a public scapegoat for internal failings.

Luca Ratti, a labour law professor at the University of Luxembourg, says the impact of AI is still hard to know © Photo credit: Matic Zorman

An employee in Luxembourg in an email, however, blamed the layoffs on “overambitious expansion, underperforming acquisitions, and growing financial strain.” Writing anonymously as he is still works for the company, he called the redundancies a “painful reckoning”, with AI used as a public scapegoat for internal failings.

When people lose their jobs to AI, it is often framed as cost-cutting.

“But if you’re going to use AI, then you actually need to invest in it. Whether you’re building it in-house, or if you’re using subscription-based models, that’s capital layout, you still have to pay for that,” Debić said. “It’s to improve efficiency. Not everybody whose job can be done by AI is going to be laid off.”

And current layoffs aren’t the only problem. “I think the more serious question is what actually happens to students who are coming into the market, because a lot of these are taking away junior programmer jobs, junior analyst jobs, all the entry level things where you actually get to build experience,” said Debić, who teaches at the Luxembourg School of Business.

Opportunities as populations age

The loss of jobs to AI can be positive in some cases, Debić argued, as people can leave the most boring and repetitive tasks behind and the economy can still grow, even as the population ages.

“If you look at Japan, 32% of the population is 65 and over. They sell more diapers for adults than for babies,” said Debić. Population growth slowing down is a global trend, seen also in juggernauts China and India, he said. “Sub-Saharan Africa […] That’s the only place where you still have old-fashioned population growth.”

Huge chunks of the economy will not see many job losses to AI – or relatively few in the immediate future at least. Looking at history, the agricultural sector dropped from 85% to 2% of the labour market. The digital revolution has automated factories at the expense of manual labourers.

“The first wave of the digital revolution, that automated a lot of stuff. Early robotics, factories being automated, processes being automated. That sort of threw away all of the more interesting labour. I mean, it was still drudgery, but it was more interesting. What’s happening now is it’s replacing analysts, it’s replacing highly educated professionals,” Debić said.

The surge in AI is reminiscent of the dotcom boom, he warned. “We’ll have an AI bubble, it’ll burst eventually, and then we’ll get back to normal but AI will stay here because it’s increasing productivity and that’s the basis of capitalism.”

What AI cannot replace though is human creativity.

Boris Debić, faculty member at the Luxembourg School of Business and former senior executive at Google © Photo credit: Boris Debić

What AI cannot replace though is human creativity.

While it can make any picture look like a Van Gogh or turn a tune into a song reminiscent of Bob Dylan, it cannot come up with the next Van Gogh or Dylan.

“Coming up with style today is impossible for this generation of software. That involves the whole human being, that involves the society where this human is living, the frustrations, the loves, the ambitions, the failures, all of that goes into style. That is definitely something that can’t be done by an AI. It’s just not the way it is,” he said.

New technology, uncertain times

This recalibration of human qualities can apply to countries, too, he believes. Luxembourg, with its large tech sector, has more to gain than to lose, Debić said.

“The fact that you have the big ones like Amazon and Google coming in tells you something, and probably not just because of the tax factors and all of that. I think it’s probably because it’s a place which is very close to very big economies and is sort of like a little melting pot, if you will. That may be an interesting competitive advantage,” he said.

“We have people from all over Europe there, and it’s all business oriented, right? So it’s all centred around how to run your business, how to get into the European market – looking for efficiencies in that space for conversations about Europe, about the future of Europe from a relatively neutral point. I think that is an advantage that Luxembourg has. And it’s a big one,” added Debić.

For academic Ratti, it is difficult to yet reach a definitive conclusion about the links between increasing AI use and job losses, noting that the impact of AI is “two-fold” and may lead to new roles being created.

“The times are so uncertain and the technology is so new that we are not identifying [trends] yet. It is not easy to predict,” Ratti said.

However, regardless of how widespread AI use becomes, the “serious economy” is not going away, believes Debić.

“AI is not going to destroy Coca-Cola or Johnson & Johnson or Nestlé or all of these big global players like Mercedes-Benz or Renault. But it’s going to change them and they certainly need some help in how to navigate that. There’s a lot of exchange of knowledge that can be had that way.”