Similar strategy at another company.
Recent layoff announcements by technology companies Atlassian, Block, and now Snap show that the tech industry is converging on an approach to transforming business: act early, cut deep, and move forward with fewer people and more AI.
Companies tend to position reductions as a preventative measure, a way to reset their businesses before AI forces them into trouble.
“We are already seeing small teams leveraging AI tools to drive meaningful progress on some of our key initiatives,” Snap CEO Evan Spiegel said in a memo published Wednesday, announcing that the company would cut about 1,000 jobs, or 16% of its workforce.
CEOs explaining the latest round of layoffs (representing about 10% of Atlassian’s workforce and nearly half of Brock’s workforce) often describe the move as a necessary recalibration of the workforce and how work gets done thanks to AI.
That could be a smart strategy, Dan Kaplan, managing partner and head of the human resources practice at consulting firm ZRG, told Business Insider.
“If you say you’re making cuts because you’re using AI, you’re going to look more progressive and smarter,” he says.
These layoffs are happening even though AI is not yet strong enough to replace all that many workers, Kaplan said. Nevertheless, he said, CEOs want to show they are ready for what lies ahead.
“You have to bet on it without having all the data,” Kaplan said of the mindset of many CEOs.
“Change the way you work”
CEOs are making such bets. Atlassian CEO Mike Cannon-Brooks said in a memo that AI will “change the way we work,” while Block’s Jack Dorsey wrote about “new ways of working that will fundamentally change what it means to start and run a company.” Mr. Spiegel explained the need for “new ways of working that are faster and more efficient.”
Accounts of recent layoffs at Meta and other technology companies, including Amazon, have variously focused on the need to become more efficient and agile.
Many also mentioned the value of small teams and a startup mentality, and making room for AI to take on more of the work.
Melissa Swift, founder and CEO of work consultancy Ansrom Insight, said the overlap in terms is not surprising. It’s tempting for companies to “understand the ongoing cultural narrative” about why they’re cutting jobs.
“It’s not dangerous to say what other people are saying,” she said.
Snap, Block, and Atlassian did not respond to requests for comment from Business Insider.
The layoffs also help investors, who tend to be rewarded for cutting costs.
At the same time, Scott Kerzner, CEO of InnoLead, a research firm focused on corporate innovation, said AI is an overarching explanation for many of the cuts, even though several factors are likely at play.
These include interest rates, inflation, tariffs, pandemic-era overemployment, and the boom-bust cycles that have shaped the tech industry for decades.
“Companies feel they need a fig leaf to explain any layoffs,” Kersner says.
Broadly speaking, he said, some companies are exploring a combination of AI and headcount reductions to alleviate some of the pain of higher costs and “lead them into the future.”
Another important point is that no company is treating recent layoffs as a warning light. Of course, leaders always want to instill confidence and avoid spooking investors, but to varying degrees, the message points to strength rather than economic headwinds.
Atlassian highlighted revenue growth in its cloud business, with Block citing growth in its customer base and improved profitability.
Snap, which is facing pressure from activist investors, said the job cuts reflect an effort to prioritize investments “most likely to create long-term value” and put the company on a “clearer path to bottom-line profitability.”
Small is bigger now
Companies that cut jobs also tend to emphasize broader shifts, such as restructuring teams, rather than simply laying off employees. For some tech CEOs, a fundamental assumption of the post-pandemic era is that their companies have grown so large that they could run them more efficiently with smaller teams.
Kersner said the desire to be more agile is understandable, especially in an era when the next competitor could be a small startup, but it’s often difficult for large companies.
“It’s very easy to say, ‘Let’s reorganize into smaller teams. Let’s be more nimble and nimble,'” he says. But at the end of the day, large companies have a lot of bureaucracy that slows them down, Kersner said.
Beyond faster action, salary savings are clearly an attraction for employers. Compared to some of the things AI can do, “humans seem pretty expensive,” he says.
But Kersner said he hasn’t seen much evidence that companies feel forced to cut staff simply because of large spending on AI infrastructure or tokens.
Anthrome Insight’s Swift said that even if companies choose to trade talent for AI, technology still trumps workers in many cases.
“You may be funding that investment by reducing roles, but it’s not because AI can already do the job,” she says.