Goldman Sachs Plans Further Job Cuts as AI Drives Cost Savings

As the bank seeks to further reduce costs and capitalise on efficiencies brought about by artificial intelligence (AI), Goldman Sachs has reportedly told its employees to anticipate another round of layoffs before the year finishes. According to an internal memo distributed to staff, the New York-based company intends to "constrain headcount growth through the end of the year" and implement a "limited reduction in roles across the firm," according to Bloomberg.

According to bank spokesperson Jennifer Zuccarelli, Goldman Sachs anticipates ending the year with a total rise in headcount despite the planned reductions. According to the study, the company had 48,300 workers overall as of the end of September, up roughly 1,800 from the end of the previous year.

Goldman Sachs' “OneGS 3.0” strategy

The bank's new "OneGS 3.0" strategy was unveiled in the memo, which also hailed the efficiency gains anticipated from AI as a means of achieving even higher growth. Top executives stressed that it would take a "multiyear effort" to integrate AI in areas such as vendor management, regulatory reporting, lending procedures, and client onboarding.

In the memo, CEO David Solomon, President John Waldron, and CFO Denis Coleman stated that although they are still in the early stages of determining the best areas to implement AI solutions, it has become increasingly evident that their operational efficiency goals must take into account the benefits that these game-changing technologies will bring.

In addition to retooling their platforms, the executives emphasised that in order for Goldman to "fully benefit from the promise of AI, we need greater speed and agility in all facets of our operations." The anticipated cut comes after the bank's regular yearly exercise earlier this year, which resulted in a 700-person decrease in net headcount during the second quarter.

AI Fear Looms Over the US Market

The biggest American banks' remarks regarding AI are similar to those of technological titans like Amazon and Microsoft, whose executives have warned their employees to prepare for AI-related disruptions, such as layoffs and hiring freezes.

As AI's underlying models improve and investors reward companies that are considered as leaders in the field, corporations from a variety of industries have been more forthright this year about the potential effects of AI on workers.

The prevalent belief in banking is that employees in operational positions, often known as the back and middle office, are typically most at risk of losing their jobs due to artificial intelligence. For example, a JPMorgan official informed investors in May that, despite an increase in business volumes, AI will result in a minimum 10% reduction in operations and support personnel over the next five years. Solomon appeared to caution the 48,300 workers of Goldman Sachs that some may find the upcoming years uncomfortable.