The Chief Financial Officer and Chief Operating Officer of the San Francisco-based payment company Block, Amrita Ahuja, defended the company’s large-scale layoffs due to artificial intelligence (AI) transformation, stating that this change is an inevitable trend.
Ahuja spoke at the CFO Council summit of The Wall Street Journal in Palo Alto, California last week, highlighting the necessity of productivity improvement as a driving force for companies to reassess their cost structures. “We can reinvest these earnings into new operational models, including investing in AI infrastructure, computing resources, and those talents who truly excel in AI and can increase their efficiency tenfold,” she said.
Founded in 2009 by Jack Dorsey, co-founder of Twitter, Block, formerly known as Square, currently operates platforms including Square, Cash App, and Afterpay.
On February 26, Dorsey announced that the company would be laying off over 4,000 employees, representing over 40% of the workforce, citing rapid advancements in AI models.
“Some things have changed,” he stated. “The intelligent tools we are developing and using, along with a more streamlined, flat organizational structure, are shaping new ways of working and fundamentally altering the operation and construction of the business.”
Dorsey also pointed out that repeated layoffs would damage morale, necessitating “decisive and clear action.” Writing on the X platform, he said, “We overhired during the pandemic because I mistakenly set up two separate company structures (Square and Cash App) rather than an integrated system. We have always been a highly efficient company, better than most.”
Ahuja mentioned that Block has been continuously developing and implementing AI tools over the years. As the CFO, she believed it essential to drive such transformations proactively. “We have established a sufficient number of use cases, have confidence in the future outcomes, and overall efficiency will see a significant improvement,” she said. She further revealed that since September last year, the company’s development efficiency has increased by about 40%.
She further indicated that departments such as product development, which are more easily automated by AI or have the potential for efficiency improvement, will be the primary focus of workforce adjustments.
Additionally, with the reduction in workforce scale, the company forecasts that each employee can generate approximately $2 million in gross profit this year, significantly higher than around $1 million last year and $750,000 in 2024.
Silvio Tavares, CEO of the San Francisco credit scoring company VantageScore, who also attended the event, mentioned that businesses are under pressure to redesign their business processes to reduce costs. “The issue is no longer whether it will happen but when it will happen,” he said.
While the widespread layoffs triggered by AI have not fully materialized, he anticipated a significant acceleration in the next year.