Artificial intelligence (AI) is causing a “software scare” in the technology industry. Scores of companies have been spooked by the potential for AI to upend business models and trigger a selloff in tech stocks, from Microsoft to Oracle. As the sector navigates through the turbulence and acclimates to the environment, companies are trimming the fat by laying off US workers. Despite executives losing sleep over the rise of Skynet, they still have an appetite for H1B workers.
Starving for H1B Workers
In recent years, employment in the software industry – coders, designers, processors, and publishers – has fallen by about 200,000, coinciding with the release of ChatGPT. At first glance, workforce reduction efforts appear to be kicking into overdrive amid immigration restrictions and AI.
Software behemoth Oracle is terminating thousands of workers to lower costs and expand its AI investments. Atlassian shed 1,600 jobs, Amazon plans to cut 16,000 positions, and Block will get rid of 4,000 employees. In fact, AI is quickly becoming the oldest excuse in the book for justifying layoffs rather than the post-pandemic over-hiring and the goal of boosting profit margins.
In the first three months of 2026, US tech firms have announced 52,050 layoffs, up 40% from the same period a year ago, according to global outplacement firm Challenger, Gray & Christmas. This is the highest year-to-date total since 2003, an unpleasant time for the industry.
“Companies are shifting budgets toward AI investments at the expense of jobs,” Andrew Challenger, the firm’s chief revenue officer, said in a statement. “The actual replacing of roles can be seen in Technology companies, where AI can replace coding functions. Other industries are testing the limits of this new technology, and while it can’t replace jobs completely, it is costing jobs.”
Dell and Meta platforms could soon be the next major firms to confirm job cuts. This is causing consternation among American software professionals. The oft-described domestic “software scare” is fueling a foreign opportunity, particularly for H1B workers. It is worth noting that this fear is bleeding into the $2 trillion private credit market.
Businesses will submit H1B petitions to obtain federal approval to hire foreign workers when they cannot find individuals with equivalent expertise in the United States. Proponents contend it is a critical program for remaining competitive, but opponents argue it harms US workers.
US Citizenship and Immigration Services data show that scores of tech firms have been filing thousands of petitions to employ H1B workers over the past 12 months. So far this fiscal year, firms such as Oracle and Microsoft have submitted more than 400 and 1,200 petitions, respectively. Online retail juggernaut Amazon is at the top of the list, exceeding 2,000. Others on the list: Google (1,040), Apple (983), Nvidia (343), Cisco Systems (319), and IBM (271).
Since the dot-com boom, California has been the top state for the H1B program. However, based on government data, Texas is quickly becoming another hub for foreign workers, mainly because so many firms are relocating operations to the Lone Star State. Companies may also be shelling out the big bucks after President Donald Trump signed a September 2025 proclamation imposing a $100,000-per-year fee on some H1B visa holders.
To be fair, US firms also submit petitions to extend or renew current H1B visas. Either way, the industry is addicted to foreign labor. Both sides of the argument will present a compelling case, but it will not change the current situation in which US companies will continue to cite AI for layoffs and turn to H1B workers to bolster margins.
Today’s coders will need to be more tactical, whether in their current positions or when seeking new employment. “One thing that is clear is that AI is changing work and the workforce. Workers will need to be more strategic as they lead AI-powered agents that handle increasingly complex tasks. Human workers will need strong decision making and judgment skills in the age of AI,” Challenger said.
Expanding the Lens
The accepted narrative is that software employment is being decimated, with many market watchers pointing to the 50,000 layoffs this year and the 200,000 decline over the past few years. Still, the industry as a whole employs 3.5 million. Compared to the broader workforce, these numbers are a drop in the bucket, says Torsten Slok, chief economist at Apollo.
“The 200,000 decline in software employment should be compared with the 63 million people who find a new job each year, the 38 million who voluntarily quit their jobs and the 21 million who are laid off,” Slok said. “The bottom line is that, regardless of what is driving the decline in software employment, it remains insignificant compared to the broader churn in the labor market.”
