- Workday, a workplace management software company, will lay off 1,750 employees, or 8.5% of its staffers, as the business is “prioritizing innovation investments like AI.” It’s just one of many employers turning to tech as the new future of work.
In the latest round of AI-induced workforce layoffs, a workforce management titan will cut its staff by about 8.5% as the company redirects to AI investments.
Workday CEO Carl Eschenbach sent out a memo to his employees on Wednesday detailing the sacking. He wrote that the company—which makes software for managing finances, employee benefits, and HR operations—is at a “pivotal moment” in the market. As other businesses are “reimagining how work gets done,” their heightened need for AI will necessitate some cuts. Eschenbach said the layoffs will help the $66 billion business better align with its customers’ needs.
“I realize this is tough news, and it affects all of us—the Workmates who are leaving and those who’ll continue with us. I encourage you to work from home or head home, if you’re already in the office,” he wrote in the statement.
Those laid off in the U.S. will receive at least 12 weeks' pay, with more tacked on depending on the employee’s tenure. They will also be given career services, benefits support, immigration assistance, and additional vesting of restricted stock grants, according to the memo.
Eschenbach also laid out exactly why the company is making those cuts. He listed four lines of reasoning: redirecting investments to developing AI and hiring new people in relevant roles, sharpening the company’s processes, clarifying duties for each role, and changing the company’s geographic footprint. While these factors span widely across the organization, hisemphasis seems to boil down to AI: It’s here, it’s streamlining work for others, and it can do the same for us.
When asked for further comment, a company spokeswoman directed Fortune to the blog post.
A stream of workforce reductions as AI becomes king
Workday’s choice to redirect investments to AI at the cost of humans isn’t a one-off occurrence. Companies have been steadily shedding staffers amid the tech takeover.
Earlier this week it was discovered Salesforce will lay off more than 1,000 staffers as the company redirects hiring to AI salespeople. This comes as no surprise, as CEO Marc Benioff is an outspoken proponent of the technology. At this year’s World Economic Forum in Davos, the CEO said that he is among the last cohort of chief executives to oversee all-human workforces—and that from here on out, AI will be in the picture.
And Klarna, a payment service company, is on the same wavelength. CEO Sebastian Siemiatkowski stopped hiring in late 2023, and has embraced his shrinking workforce as he shifts focus to AI. Klarna went from 4,500 staffers that year down to 3,500 by 2024. But Siemiatkowski isn’t fazed by the drop—in fact, he believes it’s a part of the process. The business built a chatbot to do the work of 700 customer service agents, started using AI in marketing, streamlined communication duties, and reduced in-house lawyer time. He even sent an AI version of himself to announce the company’s quarterly earnings.
But it’s not just the tech titans that are shifting gears. About 41% of leaders said they will need to reduce their workforces in the next five years, according to a recent report from the World Economic Forum. And the bosses predicted they would do so because some employee skills would become obsolete with the advent of AI—the tools can do the work better, and faster, than humans, they said. But as businesses are still smoothing out the kinks in their revolutionary tools, there’s still conversation over what is lost when people are replaced.
