The Freelance Informer analyses the gathering storm of geopolitical tensions, bloated AI budgets and mass layoffs and the impact these developments are already having on freelancers and contractors
The once reassuring hum of global commerce and job creation is now punctuated by pangs of geopolitical unease caused by war, trade tariffs and newfound power plays over territories and major shipping zones. Alongside these tensions, tech giants and US governmental departments are shedding jobs. As reports of a potential recession grow louder, a critical question hangs in the air: are things only going to get worse before they get better?
A look at tech layoffs and why they’re still happening in 2025
While the immediate post-pandemic boom masked underlying vulnerabilities, the seemingly continuous wave of tech layoffs has been spurred largely by costly AI innovation budgets and fears of a US recession. Meta, Amazon, Alphabet and Microsoft intend to invest as much as $320 billion this year into artificial intelligence technologies, according to CNBC. That’s nearly $100 billion more than Europe’s proposed defence budget.
TechCrunch reported, “The tech layoff wave is still kicking in 2025. Last year saw more than 150,000 job cuts across 549 companies, according to independent layoffs tracker Layoffs.fyi. So far this year, more than 22,000 workers have been the victim of reductions across the tech industry, with a staggering 16,084 cuts taking place in February alone.”
Germany and the UK are next in line for tech layoffs
Over the past 12 months, thousands have joined the ranks of the unemployed. This isn’t a Silicon Valley blip. The ripple effects are also felt across the UK and Europe, where economic uncertainty has prompted a widespread recalibration. According to techfundingnews.com, Germany and the UK are the new epicentres for tech workforce reductions, second to the US.
We are now in March and we are seeing a significant number of redundancies already announced by Layoffs.fyi across various sectors, with the technology and industrial sectors being particularly affected. Siemens has announced the largest number of layoffs, with about 5,600 jobs being cut globally. Hewlett Packard Enterprise (HPE) is also making substantial reductions, letting go of 2,500 employees. Ola Electric is reportedly laying off over 1,000 staff.
The total number of known layoffs in March adds up to 10,167 at the time of writing, but March has not finished yet. Several companies such as Zonar Systems, Rec Room and ANS Commerce have also made layoffs, however, the exact numbers are unknown. ANS Commerce, for example, was reportedly shut down just three years after it was acquired by Flipkart. The number of employees affected has not been made public at the time of writing.
Geopolitics and fragmented globalisation: at what cost to jobs?
Geopolitical experts are not painting a pretty picture. The era of frictionless globalisation, they argue, is drawing to a close. Instead, we are witnessing a “fragmented globalisation,” where trade blocs and national interests clash, disrupting supply chains and injecting volatility into markets. As the Economic Observatory and other institutions highlight, geopolitical risk indices are climbing, a clear indicator of the increased probability of negative economic events.
The implications are not only for the average worker but also for highly skilled workers. The tech sector, once a beacon of job security, is now a cautionary tale. The relentless pursuit of AI, while promising innovation, is simultaneously displacing human labour and not just in the tech sector.
Prof says AI warfare poses “threat to scientific progress”
According to Kanaka Rajan, associate professor of neurobiology in the Blavatnik Institute at Harvard Medical School, AI-powered autonomous weapons as a “concrete threat to scientific progress and basic research.”
In the Harvard Medical School report, Rajan said, AI-powered weapons, which often involve drones or robots, are actively being developed and deployed. She said, they will only become “more capable, sophisticated, and widely used over time due to how easily such technology proliferates.”
As that happens, she worries about how AI-powered weapons may lead to more frequent geopolitical instability and how their development could affect nonmilitary AI research in academia and industry.
Defence contractors are preparing for a spending boom
Arguably, Rajan and her team’s concerns could be warranted. The Carnegie Endowment for International Peace reported that conflicts in Ukraine, Israel, Palestine and Libya suggest that weapons with some autonomous capabilities may already be in use. These include systems like Saker Scout, Gospel, and Kargu-II. Autonomous weapons have been in existence for decades, however, AI integration is a whole new type of warfare.
“Many countries including China, Israel, Russia, South Korea, Türkiye, the United Kingdom, and the United States are also reported to be investing in building autonomous weapons,” said the report.
NATO members, for example, are looking to increase defence spending from 2% to potentially 3% of their GDP, according to recent reports out this week. This translates to an extra $220 billion for European defence, with nearly half earmarked for new kit. This spending boom will have a significant impact, particularly on European and American defence contractors, investing.com reported.
European defence companies set to prosper
European defence firms are set to be the main beneficiaries of boosted military budgets. Historically, they’ve had a smaller slice of the defence budget, but now they’re poised to gain from the push for local production. Companies including Leonardo, Dassault Aviation, Rheinmetall, SAAB, Kongsberg, and Thales are expected to see the most growth from increased European procurement. Bernstein research analysts estimate this could mean an additional $40 billion in annual revenue for European contractors. Chatter as early as November 2024 gleamed a buoyant defence sector.
“We expect Trump to seek a strong defence as he did in his first term, even if he seeks to avoid involvement in overseas conflicts,” Douglas Harned, an analyst at Bernstein, said in a November 25 report. “Trump has been vocal about the need for strong nuclear deterrence, missile defence, and expansion of space capabilities.”
The picture is more complicated for US contractors, according to the investing.com report. While they dominated European defence procurement in 2023, holding two-thirds of the continent’s defence spending, the trend towards localisation could reduce their market share. European nations are keen to develop their own manufacturing capabilities, shifting spending away from imports.
This is likely to create jobs in manufacturing, product design, technical writing, training, logistics, cyber security and AI software integration.
So, what can freelancers do to brace these testing times?
Many freelancers and contractors instinctively recognise that challenging times call for stepping outside their comfort zones to remain viable. This might involve broadening their skill sets and seeking work in sectors where their existing abilities are transferable. However, they must first convince themselves of this potential before attempting to persuade others.
Identify synergies in unexplored sectors
They’ll need to identify the synergies between their skills and new sectors. The next step should be to produce compelling online portfolio case studies that could resonate with clients in previously unexplored industries. Ones to consider include healthcare, defence, education, cybersecurity, data analysis, and AI.
Become financially fit
Financial fitness is another factor to add to the to-do list. Building an emergency fund, reducing personal and business debt, and diversifying investments can provide a buffer against economic shocks. Creating a strict budget, even for set period of time, can make a lasting impact on your mental well being.
Depending on your financial outlook, that could mean downsizing a car, a home or selling off assets. It may even mean taking on a temporary part-time job or taking in a lodger through the government’s Rent a Room Scheme. But it would be wise to get financial and tax advice before making any decisons on large divestments, purchases or changing your employment status.
Be informed
Many market signals are indicating that things may get worse before they get better. We have yet to see what the UK’s Spring Budget will entail or who will be most impacted.
While the news can sometimes be overwhelming, staying informed is crucial. By actively following trade news (i.e., sign up for Google alerts), you can anticipate potential recruitment shifts and industry impacts stemming from geopolitical events. This proactive approach can help you strategically target companies and sectors that may remain relatively stable, which could mean a steadier flow of work.
