Block Slashes Workforce as Artificial Intelligence Transforms Operations

The team at Block, the folks behind Afterpay, Cash App, and Square, are laying off 40% of their employees. Jack Dorsey, co-founder, wrote to shareholders explaining the action, saying that "intelligence tools" were the driving force. Dorsey predicts that the majority of businesses will soon do the same. With the layoffs, the company's staff will be reduced to a little under 6,000.

AI Reshaping the Global Tech Firms’ Work Culture: Dorsey

These layoffs occur at a time when artificial intelligence (AI) is causing waves in the tech industry and casting a shadow over the economy's prospects. Amazon, Meta, Microsoft, and Verizon are just a few of the companies that have recently implemented massive layoffs with a tenuous connection to artificial intelligence. Dorsey stated in his communication that the firm's new tools allow a far smaller crew to accomplish more with more efficiency. And the capabilities of intelligence tools are increasing at a quicker rate each week.

According to Block CFO Amrita Ahuja, the company may cut down on overhead by forming smaller, more capable teams and automating more of their tasks with artificial intelligence. According to Dorsey's post on X, the company's revenue is booming and profits are going up; therefore, layoffs aren't happening because of that. The Twitter co-founder thinks he's way ahead of everyone else. Most companies are late, in his opinion, he wrote.

According to Dorsey, most businesses will realise this in the coming year and implement comparable systemic adjustments. "I’d rather get there honestly and on our own terms than be forced into it reactively," said Dorsey. The epidemic years were a time of explosive growth for many of the corporations that are now laying off large numbers of workers and blaming artificial intelligence. By the end of 2019, Block had 3,835 employees and had increased its headcount to over 10,000 prior to the recent layoffs.

What Block’s Exiting Employees will Receive?

Dorsey announced that affected employees will receive severance pay ranging from 20 weeks to more than 30 weeks, with equity vesting until May. They will also receive six months of health care, any company devices, and an additional $5,000. Despite layoffs, investors have responded positively.

Shares of Block surged as much as 24% on the announcement. Concerns about the effects of AI on the workforce have been on the rise recently. The recent announcement of layoffs comes as AI companies like Anthropic and OpenAI release new business solutions. Office work in areas including wealth management, design, and human resources has recently benefited from an upgrade to Anthropic's well-known Claude model. Following Anthropic's release of Claude Cowork product improvements earlier this month, software stock prices plummeted.