By ByteBot
Tech companies cut 238,000 jobs in 2024 and 76,000 more in 2025. However, the real story isn’t the numbers—it’s who is being cut. Middle managers made up one-third of all layoffs in 2023, according to Bloomberg analysis, and now companies from Microsoft to Google are systematically eliminating entire management layers. Boards are demanding 20% workforce cost cuts with the explicit expectation that AI will fill eliminated roles. Yet industry experts say this isn’t about AI replacing workers—it’s about companies using AI investment as political cover for organizational flattening they wanted anyway. Consequently, the traditional career path from individual contributor to manager to senior leadership is breaking, and developers need to understand why.
The Numbers Tell the Story: Middle Management is the Target
This isn’t speculation. 41% of employees say their companies trimmed management layers according to a Korn Ferry survey of 15,000 professionals worldwide. Moreover, Gartner predicts one in five businesses will use AI to slash over half of current middle management positions by 2026. Furthermore, 58% of companies plan layoffs this year, with 26% calling them “very likely.”
Look at the specific actions companies are taking. First, Microsoft cut 15,000+ positions in 2025, with reports suggesting another 11,000-22,000 employees—5-10% of its 220,000-person workforce—could be affected in January 2026. Additionally, the company is targeting a 10:1 engineer-to-manager ratio, up from the current 5.5:1. Meanwhile, Google cut 10% of managerial positions—managers, directors, and VPs—eliminating an entire layer of middle managers in its GCS division. Similarly, Intel cut 35,500 jobs in less than two years and is targeting an additional $1 billion in operating expense cuts for 2026. Teams at Intel were eight levels deep before flattening.
Amazon CEO Andy Jassy explicitly connected generative AI to future workforce reductions, saying AI will reduce the size of the corporate workforce over time. Likewise, Salesforce CEO Marc Benioff confirmed 4,000 customer support workers were cut with AI’s help, reducing headcount from 9,000 to 5,000. Therefore, the pattern is clear across every major tech company: middle management is the primary target.
AI is Cover, Not Cause
Here’s the controversial part: companies aren’t eliminating middle management because AI can replace them. Instead, they’re using AI investment as justification for organizational flattening they wanted anyway. Camille Fetter, CEO of Talentfoot Executive Search & Staffing, says boards are telling CEOs: “If you don’t have plans to replace at least 20% of your workforce with these new technologies and efficiencies, then you’re not looking through the right lens.”
But industry experts argue layoffs are less about AI replacing workers and more about freeing up capital for AI investments. In fact, Microsoft CEO Satya Nadella called the company’s size a “massive disadvantage” in the AI landscape. That’s not about AI capability—it’s about organizational size and structure. Notably, companies are flattening orgs first, then citing AI second. The timing reveals the intent.
Call it what it is: cost-cutting and restructuring with better PR. Ultimately, AI gives executives political cover to make org changes they’ve wanted for years but couldn’t justify. Now they can point to “AI transformation” and boards nod approvingly.
Flat Orgs Aren’t the Silver Bullet Companies Think
Companies are betting billions that flatter organizations will deliver faster decision-making, better agility, and higher innovation. However, academic research tells a more complicated story. Yes, flat structures can improve communication and responsiveness in fast-changing environments. Nevertheless, they can also create exactly the opposite effects.
Research by Carzo and Yanouzas found employees in flat organizations reported lower productivity than counterparts in hierarchical orgs due to unclear job roles, less direct supervision, and overcommunication. Additionally, studies on innovation showed firms with deeper hierarchies produced more important patents, even after controlling for size. Furthermore, removing layers doesn’t reduce control—it often transfers decision rights to functional managers at the top, creating more centralization, not less.
The risks are real: fewer promotion opportunities, less role clarity, scalability issues, and workload that increases non-linearly for remaining managers. Indeed, no universal superiority exists for flat or hierarchical structures—performance depends on strategic alignment with external environments, not structure alone. Nevertheless, companies are acting as if flatter automatically equals better. The research doesn’t support that assumption.
The Tech Career Path You Knew is Breaking
For developers, this organizational shift means rethinking career progression. The traditional ladder—individual contributor to team lead to manager to senior manager to director—is narrowing. Consequently, fewer management layers mean fewer management positions, longer times to promotion, and more competition for remaining roles.
The alternative is emerging: the Staff+ engineering track. Staff Engineer is the first rung on the IC leadership ladder, a level above Senior Engineer requiring 7-10+ years of experience. Specifically, Staff Engineers provide technical leadership, make architecture decisions, and mentor teams without managing people. Similarly, Principal Engineers set engineering strategy for the company, manage technical projects with broad impact, and influence architectural vision without direct reports.
This isn’t just a title change—it’s a fundamental shift in how developers advance. Therefore, technical depth matters more than management aspirations when companies are prioritizing “builder ratios” and cutting middle management. Moreover, IC tracks offer strategic impact, strong compensation, and technical influence without the overhead of people management that’s increasingly seen as organizational bloat.
What Developers Should Do
Stay technical. The Staff+ IC track offers advancement without the shrinking management path. Specifically, deep technical expertise in high-demand areas—AI, cloud, security—creates leverage. Furthermore, architectural and strategic thinking skills matter because Staff and Principal engineers operate at that level without managing people.
Reconsider management aspirations. Management roles are shrinking and becoming more competitive. Instead, Staff and Principal engineers have strategic impact without people management overhead. If you’re banking on a management promotion in the next few years, understand the game has changed.
Understand what’s actually happening. Companies are using AI as cover for cost-cutting and org restructuring. This isn’t technological inevitability—it’s strategic choice. Clearly, executives prefer flatter orgs and AI investment gives them political justification. Your career path needs to adapt to this new reality, not the old model of climbing the management ladder.
The middle management purge isn’t about AI replacing humans. Instead, it’s about companies reorganizing around preferences for flat structures and higher builder ratios, with AI serving as convenient justification. Ultimately, developers who understand this can navigate the shift. Those who don’t will keep waiting for management promotions that aren’t coming.
