Intuit (INTU) , the parent company of TurboTax and Credit Karma, has just made a harsh decision that confirms a major fear workers have about artificial intelligence across the nation.
In a memo to employees, Intuit CEO Sasan Goodarzi revealed that the company is laying off 1,800 employees, which is 10% of the company’s workforce. He stated that the company’s latest move isn’t the result of cost-cutting, but rather due to its recent investment into AI.
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“This is truly an extraordinary time – AI is igniting global innovation at an incredible pace, transforming every industry and company in ways that were unimaginable just a few years ago,” wrote Goodarzi in the memo. “Companies that aren’t prepared to take advantage of this AI revolution will fall behind and, over time, will no longer exist.”
Goodarzi also claims that most of the laid off employees were “not meeting expectations,” and that their last day at the company will be on Sept. 9.
“We’ve significantly raised the bar on our expectations of employee performance, resulting in approximately 1,050 employees leaving the company who are not meeting expectations and who we believe will be more successful outside of Intuit,” wrote Goodarzi.
The statement about employees "not meeting expectations" is sparking sharp criticism on social media. In a viral tweet, some X users are claiming that the company is pushing the blame solely on employees for the recent layoffs.
How Intuit takes care of its people:
— Gergely Orosz (@GergelyOrosz) July 11, 2024
It's CEO advertises to the world that those they are letting go are not meeting expectations.
You cannot make this up: it's from official Intuit comms.
If this is not punching down for no reason, I don't know what is... pic.twitter.com/IpKbXPXeCK
Yeah I don’t totally get this new vibe on blaming layoffs on performance (which often is true if < 10% or so)
— Jason ✨👾SaaStr.AI Sept 10-12✨ Lemkin (@jasonlk) July 11, 2024
I guess it’s to send a signal to the rest of folks they all need to work harder in more challenging times
Just not sure that motivates anyone at all to do so
I guess that's one way for a CEO to wash their hands from having made any mistakes or overhiring..
— Wille Faler (@wfaler) July 11, 2024
Goodarzi also claims in the memo that the layoffs will allow Intuit to reinvest in “the necessary skills and capabilities” to support critical areas at the company, and that includes later hiring 1,800 people in engineering, product and customer-facing roles.
Intuit will also be reducing the number of executives at the company by 10%, and will also be cutting more than 300 roles “to streamline work and reallocate resources toward key growth areas.” In addition, employees at the company’s sites in Edmonton and Boise will either be forced to relocate or find another job as Intuit is planning to shut down those locations.
Intuit ramps up AI efforts as it is beginning to face increased competition
As the company is focusing more on investing in its AI-powered technology such as Intuit Assist, which is implemented in its TurboTax product to help customers file taxes, it is also planning to consolidate 80 technology roles in multiple states.
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Intuit’s heavy investment in AI comes after the IRS announced in May that it will be making its free online tax filing service permanent after testing it out earlier this year. The IRS also asked all 50 states to help taxpayers to use the system while they file their tax returns in 2025.
This poses a major threat to Intuit’s TurboTax product, which the company expects to earn $1.4 billion from by the end of the fiscal year, according to its most recent earnings report. It also expects for its TurboTax units to decline by 1%.
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Recent layoffs and AI are sparking worries amongst workers
Layoffs have continued to ravage the tech industry this year after 263,180 tech employees in the U.S. lost their jobs in 2023, according to data from Layoffs.fyi. So far in 2024, 362 tech companies have laid off their workers, which resulted in 106,630 employees losing their jobs.
As AI is taking over multiple industries, many workers are starting to fear that the technology will take their positions. According to a recent survey from MarketWatch, 68% of U.S. workers that were polled said that they believe that AI will result in more unemployment, and 46% said that they think that their job will be terminated due to AI in the future.
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