Different company, similar strategy.
Recent layoff announcements from tech firms Atlassian, Block, and now Snap signal that the tech industry is converging on an approach to shaking up business: Move early, cut deeply, and proceed with fewer people and more AI.
The companies tend to cast the reductions as preventive measures — a way to reset the business before AI forces the issue.
“We have already witnessed small squads leveraging AI tools to drive meaningful progress across several important initiatives,” Snap CEO Evan Spiegel wrote in a memo released Wednesday announcing the company would cut about 1,000 workers, or 16% of its employees.
CEOs describing the latest reductions — which amounted to about 10% of workers at Atlassian and nearly half at Block — often present the moves as recalibrations in how much labor is needed and how work gets done, thanks to AI.
That can be a savvy strategy, Dan Kaplan, managing partner and head of the HR practice at the consulting firm ZRG, told Business Insider.
“If you say you’re doing a reduction because you’re leveraging AI, you look more progressive and smarter,” he said.
These cuts are happening while AI isn’t yet good enough to replace all that many workers, Kaplan said. Nonetheless, he said, CEOs want to show they are ready for what’s to come.
“You sort of have to bet into it without having all of the data,” Kaplan said of many CEOs’ thinking.
‘Changing how we work’
CEOs are showing those bets. In the memo, Mike Cannon-Brookes, Atlassian’s CEO, pointed to AI “changing how we work,” while Block’s Jack Dorsey wrote about “a new way of working which fundamentally changes what it means to build and run a company.” Spiegel described the need for “a new way of working that is faster and more efficient.”
Explanations for recent layoffs at other tech companies, including Meta and Amazon, have variously focused on the need to be more efficient and nimble.
Many also mention the value of small teams and a startup ethos — and making room for AI to take on more work.
The overlapping language isn’t surprising, said Melissa Swift, founder and CEO of work consultancy Anthrome Insight. It’s tempting for companies to “grab onto this ongoing cultural narrative” about why they’re conducting layoffs.
“There is no danger in saying what everybody else is saying,” she said.
Snap, Block, and Atlassian didn’t respond to a request for comment from Business Insider.
Layoffs can also help with investors, who tend to reward cost-cutting.
At the same time, AI has become a catch-all explanation for many reductions, when it’s likely that several factors could be at play, said Scott Kirsner, CEO of InnoLead, a research firm focused on corporate innovation.
Among them: interest rates, inflation, tariffs, pandemic-era overhiring, and the boom-and-bust cycles that have shaped the tech industry for decades.
“Companies feel like they need a fig leaf to explain any kind of job cuts,” Kirsner said.
Broadly, he said, some firms are looking for a combination of AI and job cuts to help alleviate some of the pain of higher costs and “lead them to the future.”
Another through-line is that none of the firms framed recent layoffs as warning lights. Of course, leaders always want to instill confidence and avoid alarming investors, yet, to varying degrees, the messaging points to strength rather than economic headwinds.
Atlassian highlighted revenue gains in its cloud business, while Block cited growth in its customer base and improved profitability.
Snap, which has faced pressure from an activist investor, said the layoffs reflect an effort to prioritize investments “most likely to create long-term value” and put the company on a “clearer path to net-income profitability.”
Smaller is big right now
Companies making cuts also tend to highlight broader shifts beyond simply letting workers go, including reorganizing teams. For some tech CEOs, the underlying assumption in the post-pandemic era is that their companies have grown too big and that smaller teams will operate more effectively.
While the desire to be more nimble is understandable, especially in a period when the next competitor might be a tiny startup, it’s often difficult for larger businesses, Kirsner said.
“It’s really easy to talk about ‘Let’s reorganize into small teams. Let’s be more nimble and agile,'” he said. Yet, ultimately, large companies have a lot of bureaucracy that slows them down, Kirsner said.
Beyond moving faster, saving on salaries has an obvious appeal for employers. Compared to some of the things AI can do, he said, “people look pretty expensive.”
Yet Kirsner said he hasn’t seen much evidence that companies feel compelled to cut workers solely to make room for their hefty spending on AI infrastructure or tokens.
If companies do opt to make a people-for-AI trade, the tech still can’t outmatch workers in many cases, Swift of Anthrome Insight said.
“You might be funding that investment through cutting roles,” she said, “but it’s not because AI can already do the work.”
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