Global technology companies are undertaking some of the most expensive workforce reductions in history, spending billions on severance packages, reskilling programmes, and brand protection. The phenomenon reflects a strategic realignment of operations rather than simple cost-cutting. As automation and artificial intelligence reshape work models, corporations are using layoffs as tools for structural transformation while ensuring minimal damage to their reputation and investor confidence.
According to Shruti Swaroop, founder of Embrace Consulting and co-founder of the International Inclusion Alliance, generous severance payouts serve several business objectives. They reduce legal exposure, protect employer branding, and enable faster transitions. Companies prefer taking a financial hit up front to avoid prolonged costs and risks later. These payments are not acts of compassion but calculated expenses that serve operational and reputational goals.
Swaroop explained that the modern approach to layoffs includes structured playbooks involving visa assistance, outplacement programmes, and extended benefits. This practice has gained momentum in India’s IT industry as well. Tata Consultancy Services (TCS), for example, laid off 20,000 employees as part of an AI-led restructuring drive. The company expects a one-time financial burden of about ₹1,135 crore, offering notice pay, severance, early retirement, and support programmes.
Accenture has spent over $2 billion globally on severance in recent years, while global giants like Alphabet, Meta, Amazon, Microsoft, Salesforce, and Intel have each incurred severance costs running into hundreds of millions. These expenses are typically booked in the same quarter the layoffs occur, temporarily lowering reported earnings but improving long-term margins by reducing payroll and benefits.
Experts say the key motivation lies in managing optics and reputation. In competitive talent markets, how a company treats departing employees influences its image among future recruits, clients, and investors. Dr Vibhav Singh, Associate Professor at Great Lakes Institute of Management, observed that in the AI era, layoffs are not just cost-driven—they are part of a “structural realignment.” Firms eliminate roles that can be automated while redeploying resources into more strategic functions.
Singh also highlighted that “severance packages are transition costs,” helping companies reshape their workforce without triggering panic among stakeholders. She added that buyouts help maintain employee morale and investor trust, ensuring that innovation and institutional knowledge are not entirely lost.
Both experts agree that the trend of generous severance is primarily rooted in business strategy. These payouts buy operational efficiency, legal safety, and goodwill in one move. They allow companies to maintain control over the layoff narrative, present a humane image to regulators, and sustain their ability to hire top talent in the future.
Ultimately, billion-dollar severance expenditures reflect a shift in how corporations view workforce management in the AI age. Paying employees to leave, when done strategically, becomes a form of investment—purchasing long-term stability, efficiency, and brand resilience at the cost of short-term profit.
