IT Services Sector Sheds 34K Jobs Amid AI Disruption

The United States’ IT services sector saw a steep decline in employment in the first quarter of 2025, losing over 34,000 jobs as companies delayed spending on traditional services and leaned into artificial intelligence alternatives.

In March alone, 10,400 IT jobs were cut, according to a new report from Janco Associates.

This downturn is part of a prolonged contraction. Over the past three fiscal quarters, IT sector employment has shrunk consistently, with a total of more than 200,000 jobs lost in the past two years.

In the last 13 months alone, the cumulative job loss stands at 155,100, with current unemployment estimates for IT professionals ranging from 133,000 to 148,000.

The report highlights AI and large language models as key drivers of workforce reductions, particularly impacting IT roles in clerical support, telecommunications, and customer service. These technologies are also curbing the creation of entry-level jobs.

Hiring remains cautious, especially among small and mid-sized firms, while larger corporations prioritize cost-cutting and AI-led productivity.

The demand for IT professionals is now skewed toward specialists in AI, cybersecurity, internet processing, and emerging technologies. However, experienced developers focused on legacy systems face dwindling prospects.

Janco reports that terminations have exceeded new hires for three consecutive quarters. The unemployment rate for IT professionals peaked at 5.7% in January before easing to 5% in March.