Fears that AI will be stealing jobs were given fresh life on Wednesday, when accounting giant Intuit announced it would lay off 1,800 employees as part of an AI-centered reorganization. The cuts will affect 10 percent of workers at the company, which owns accounting software TurboTax and QuickBooks.

In a memo sent to staff, Intuit CEO Sasan Goodarzi noted that aligning the business with AI will make it competitive as technological change sweeps the economy.

"Companies that aren't prepared to take advantage of this AI revolution will fall behind and, over time, will no longer exist," he wrote.

The layoffs, which will be completed in September, are not a result of economic hardship, according to Goodarzi, who maintained that Intuit is "in a position of strength" financially. (Laid off employees will receive at least 16 weeks' severance and a minimum of six months' health insurance coverage.) Rather, Goodarzi cited poor performance as the motivating factor in laying off 1,050 of the company's 1,800 employees.

"We've significantly raised the bar on our expectations," he wrote.

Goodarzi added that the company would replace departing staff at a rate of 1:1 by creating new roles bolstered by generative AI tools. "We will hire approximately 1,800 new people primarily in engineering, product, and customer-facing roles such as sales, customer success, and marketing," the CEO said in the memo.

In an email to Inc., a company spokesperson said that the layoffs are "about increasing investment in key growth areas: Gen AI, money movement, mid-market expansion, and international growth."

Intuit's shift to AI-oriented labor is happening amid fears that the technology could displace droves of workers. According to a June survey conducted by Duke University and the Federal Reserve Banks of Richmond and Atlanta, two-thirds of the American CFOs who responded said their companies are looking to replace human workers with some kind of automation. Over the last year, 60 percent of the 450 companies surveyed said they have "implemented software, equipment, or technology to automate tasks previously completed by employees."

AI software, which is often used to produce text, audio, and images on demand, is increasingly viewed by company leaders as essential to competitiveness.

Last August, Erik Brynjolfsson, a professor at the Stanford Institute for Human-Centered AI, spoke to the New York Times about a shift in thinking regarding AI capabilities. "To be brutally honest, we had a hierarchy of things that technology could do, and we felt comfortable saying things like creative work, professional work, emotional intelligence would be hard for machines to ever do," he said. "Now that's all been upended."

Additional data shared with Inc. indicates that startups are turning to OpenAI's text generation tool, ChatGPT, in lieu of hiring freelancers on gig work sites, such as Fiverr, Upwork, and Toptal.

According to an unpublished survey by the accounting firm Kruze Consulting, the number of startups paying for enterprise versions of ChatGPT has exploded since 2023. Nearly two-thirds of the companies on Kruze's client list of 550 VC-backed startups are paying for the service, Kruze reports, whereas, the average spend on freelance copywriters has plunged by 83 percent since November 2022.

"Basically, startups aren't spending money on outsourced marketing -- mainly writing -- now that they can use AI," Healy Jones, VP of financial strategy at Kruze, said in an email to Inc.

While recent news and figures make for grim reading for freelance copywriters, data indicate that AI's incursion into other roles has been less dramatic, at least for now. A recent survey by researchers at the Massachusetts Institute of Technology found that companies could only replace 23 percent of wages paid to human workers with AI tools performing the same jobs. Researchers determined this by assessing the current cost of using AI models to perform certain tasks, and then comparing that cost with compensation for human workers.

"This is not something where all of the jobs are replaced immediately," Neil Thompson, director of MIT's FutureTech research project, said in a press release last month.

Nonetheless, layoffs at high-profile companies like Intuit will signal that a technological tipping point is near -- and along with it, more fallout for workers.

 

Inc