Big Tech leaders once pointed to economics when cutting jobs. Now they are referring to AI.
Recent layoff memos, including those from Block and Atlassian, read more like strategic manifestos for the age of AI than apologetic explanations of economic headwinds and cost-cutting efforts.
Block’s Jack Dorsey and Atlassian’s Mike Cannon-Brookes are both candid in highlighting the profound changes in how technology is reshaping work – how many workers will be needed in the coming years.
Dorsey wrote that new technology, combined with smaller, flatter teams, is “enabling new ways of working that fundamentally change what it means to build and run a company.” On February 26, he announced that the company would cut more than 40% of its workforce.
Atlassian, a software company that makes productivity tools like Jira and Trello, announced Wednesday a reduction of about 10%. In his memo, Cannon-Brooks didn’t just spell out the details of his severance package or highlight factors such as the usual fodder for such letters, such as macroeconomic pressures.
Instead, he highlighted in bold the company’s AI philosophy and how it has reinvented itself in response, explaining: “We fundamentally believe in people. and AI produces the best results. ”
Rick Wargo, managing partner and global technology practice leader at executive search firm Boyden, told Business Insider.
“As things progress, they realize that they probably need different skills than what they hired them for,” he said of business leaders.
A new era of AI
Recently, other leaders such as Meta, Angi, and WiseTech have also mentioned the impact of AI in making cuts. Amazon’s Andy Jassy wrote in June that the company’s AI push meant shrinking the company’s workforce, but in subsequent cuts, Amazon recognized the need for a cultural reset.
Mr. Dorsey and Mr. Cannon-Brooks said the layoffs were not a sign of poor management and used their termination memo to assert their vision for the company. A new era of AI. Dorsey He said the company’s profitability is improving.
The company’s CFO also said during the company’s fourth-quarter earnings call that AI has increased the amount of code shipped by each engineer by more than 40% since September.
“We’ve seen engineering tasks that would take a small team weeks to complete take a fraction of the time using agent coding tools,” said Amrita Ahuja, the company’s chief operating officer.
At Atlassian, Cannon Brooks wrote, “We have momentum.” He went on to highlight growth in cloud revenue and other metrics.
Layoff memos often emphasize the strength and stability of a company. These latest memos go further than some by outlining the leaders’ priorities for those who remain.
Cannon-Brooks said Atlassian’s cuts are about adaptation, writing: “We are reshaping our skills mix and changing the way we approach building for the future.”
Limits of AI
Amidst the wave of layoffs in the technology sector, there has been much debate about whether AI is at the root of the cuts. Even if it is explicitly configured as such.
It’s likely that not all of the layoffs tech companies are making are due to AI, Will Wilson, CEO and co-founder of autonomous software testing platform Antithesis, told Business Insider.
“It’s not that growing companies have stopped recruiting,” he said.
But Wilson said that as AI advances, it becomes more likely that it will replace workers.
Previously, the technology offered few productivity benefits to most people, Wilson said. He said there are now clear efficiencies in areas such as coding.
Still, there are limits to how much money companies can save if they make a big push toward AI, said Josh Bersin, CEO of The Josh Bersin Company, a consulting firm. AI can automate things like code generation, but it won’t eliminate the need for workers, he said.
“We need to check the code,” Bersin told Business Insider. “We still have to test. We still have to update. We still have to maintain. We still have to manage production.”
Regardless of the debate over how much AI is driving layoffs or whether it’s just an age-old business imperative, some leaders are using layoff announcements to signal a vision for how their companies will navigate this new period.
Cannon-Brookes concluded her message by saying that Atlassian has weathered multiple technology changes and market cycles and grown as they did so.
“This requires continuous adaptation. It requires decisiveness,” he wrote. “And we are making difficult decisions to position Atlassian strongly for the long term.”
