A Massive Company in California Is Now Laying Off Thousands

July 11, 2024

A massive company in California is now laying off thousands of workers as it seeks to advance in its artificial intelligence ambitions.

Financial software company Intuit has announced it is laying off a total of 1,800 workers in wake of its AI advancements.

The financial technology firm is planning to lay off 1,800 employees, or 10% of its workforce, only to rehire approximately 1,800 new people in engineering, product, and customer facing positions, Intuit said Wednesday.

The Mountain View, California-based firm will also be shuttering its Boise, Idaho and Edmonton, Alberta locations, which together housed a total of 250 employees.

In a letter to employees, Intuit chief Sasan Goodarzi underscored that the layoffs are not about cutting costs, but about reallocating capital towards its “most critical areas,” including AI.

“Intuit is in a position of strength; we have the strategy and momentum that we need to succeed,” Goodarzi said.

“To fulfill our mission to power the prosperity of our customers around the world and strengthen our leadership position, we must accelerate our innovation and investments in the areas that are most important to our future success.”

As part of the cuts, the company said it has “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.”

It also trimmed down its executive headcount by about 10%, consolidated technology roles to key sites, and eliminated more than 300 positions across the company.

Despite the cuts, the company plans to grow its overall headcount in the 2025 fiscal year and beyond, Goodarzi said.

Intuit owns a number of popular financial and tech products, including MailChimp, QuickBooks, and Credit Karma.

Intuit said it is planning to accelerate investing in data and AI as well as its engineering hiring to continue developing its generative AI-powered financial assistant, Intuit Assist, and other customer-oriented solutions.

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Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.

First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.

Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.

That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.

The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.

US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.

Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.

Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.

“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”

“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.

The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.

While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”

Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”

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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia

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