This tech company just fired 1,600 employees — so it can spend more on AI
AI-driven job cuts are becoming the norm in major companies around the world. The irony is not lost on the fact that while AI is replacing jobs, job cuts are also happening because companies want to invest in AI development. The latest company to announce layoffs is Atlassian. The company axed 1,600 jobs, or 10% of its workforce, on Wednesday, and the reasoning was to self-fund investments in artificial intelligence. The company has been reeling from a plunge in its stock price driven by developments in artificial intelligence, as per a report in CNBC. Employees would be notified of their status by email.
“We are doing this to self-fund further investment in AI and enterprise sales, while strengthening our financial profile,” CEO Mike Cannon-Brookes said. The report states that Atlassian has lost over half of its value this year due to the competitive threat of generative AI tools. The stock is down 84% from its peak in 2021. While that may seem troubling, the job cut is going to result in the company doling out even more money as compensation.
An estimated $225 million to $236 million would have to be paid by the end of June, as per a company filing. CEO Cannon-Brookes also said that the company was on a fast track to sustained profitability. That is, however, easier said than done, as Atlassian has not been profitable in any fiscal year since 2017. The company went public in 2015. Despite the cuts, Cannon-Brookes claimed that AI was not taking the jobs of the employees.
“But it would be disingenuous to pretend AI doesn’t change the mix of skills we need or the number of roles required in certain areas. It does,” he wrote in a blog post. “This is primarily about adaptation. We are reshaping our skill mix and changing how we work to build for the future.” Atlassian joined a list of companies that have recently laid off thousands. One of them is Jack Dorsey’s Block.
A few weeks ago, Block cut 4,000 jobs, which is almost half of its workforce. This came after the company had cut 931 jobs in March last year. The shocking thing about these layoffs is that the company had reported a whopping $1.3 billion profit, which Dorsey termed a strong year. He said that the roles were cut as a smaller team using AI tools was the way forward.
“The core thesis is simple. Intelligence tools have changed what it means to build and run a company. We're already seeing it internally. A significantly smaller team, using the tools we're building, can do more and do it better. And intelligence tool capabilities are compounding faster every week,” Dorsey wrote in a letter to shareholders. “I don't think we're early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes. I'd rather get there honestly and on our own terms than be forced into it reactively.”
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