AI triggers mass layoffs at Workday software giant
CALIFORNIA, UNITED STATES — Workplace management software company Workday has announced it will lay off 1,750 employees, which constitutes 8.5% of its workforce.
This decision is part of a broader shift towards integrating more artificial intelligence (AI) into its operations.
“We are at a pivotal moment,” wrote CEO Carl Eschenbach in a memo to employees. As the company focuses on “prioritizing innovation investments like AI,” these layoffs are viewed as a necessary step to align more closely with customer needs and market demands.
The company outlined four key reasons for the restructuring:
- Redirecting investments toward AI development
- Streamlining organizational processes
- Clarifying role responsibilities
- Adjusting geographic presence
Support for affected employees
Eschenbach’s memo detailed the severance packages for the affected employees, emphasizing the company’s effort to ease the transition for its departing staff.
U.S. employees will receive a minimum of 12 weeks’ pay, additional compensation based on tenure, and support services including career counseling, benefits assistance, immigration help, and extra vesting of restricted stock grants.
“I realize this is tough news, and it affects all of us,” Eschenbach acknowledged, recommending that employees take time to work from home or leave the office to process the news.
Industry-wide AI transition
This move by Workday is part of a growing trend where companies are opting to reduce their human workforce in favor of AI-driven operations.
Recent actions by other tech giants reinforce this pattern. Salesforce, for instance, is laying off over a thousand employees to pivot towards AI-centric roles. Similarly, Klarna has embraced AI automation, reducing its workforce while implementing AI solutions like chatbots that replace hundreds of customer service positions.
This shift is echoed by a World Economic Forum report indicating that leaders anticipate workforce reductions due to AI, as they expect AI tools to outperform human capabilities in certain functions.
Workday’s restructuring highlights the dual nature of AI’s impact on the workforce: while promising increased efficiency and innovation, it also poses challenges for those whose roles are being redefined or eliminated.
