By Emily Bary and William Gavin
The tech sector is leading a rush of mass layoffs. Cloudflare, Upwork, Bill outlined big cuts on Thursday, following Coinbase's announcement earlier in the week.
Cloudflare, which plans to cut about 20% of its employees, said that internal AI usage was up 600% just in the past three months.
It's been a hotly debated topic as artificial-intelligence permeates corporate America: Will AI decimate workforces, as cynics have feared, or will it allow companies to simply give their employees more meaningful tasks, as is the more hopeful view?
Some early evidence suggests that the doomsayers may have been onto something. On Thursday afternoon alone, at least three public companies revealed plans to conduct mass layoffs as the world of work changes.
&#34;AI means smaller, differently resourced teams in product and engineering can make a bigger impact than ever,&#34; Hayden Brown, the CEO of gig-economy platform Upwork (UPWK), said in a posted letter to employees that announced job cuts affecting about a quarter of staffers.
Don't miss: Middle managers are on the chopping block thanks to AI in the workplace. Here's how to save your job.
He added that &#34;two-pizza teams are dead,&#34; seemingly a reference to Amazon.com's (AMZN) view that teams should be small enough that it would take no more than two pizzas to feed the group. Upwork seems to be saying that's not small enough: The company is now &#34;consolidating redundant work and collapsing workflows to reduce handoffs.&#34;
Cybersecurity company Cloudflare (NET) disclosed Thursday that it would cut more than 1,100 workers, which amounts to about 20% of staff based on an employee count disclosed in the last annual filing.
&#34;Cloudflare's usage of AI has increased by more than 600% in the last three months alone,&#34; co-founders Matthew Prince and Michelle Zatlyn said in a letter to staffers that was also shared publicly. &#34;Employees across the company from engineering to HR to finance to marketing run thousands of AI-agent sessions each day to get their work done.&#34;
In the world of agentic AI, where artificial intelligence can carry out tasks without direction, the company wants &#34;to supercharge the value we deliver to our customers.&#34;
Finally, Bill Holdings (BILL), which makes back-office software, disclosed in a filing that it would reduce up to 30% of its staff.
&#34;We are aggressively moving our company to become AI native end-to-end and rapidly changing how we work,&#34; CEO René Lacerte said on the earnings call.
Customers &#34;will not only be adopting software when they join Bill, they will be bringing on a team of expert agents that learn their financial back office and run it,&#34; he said.
At the same time, the company said in a release that its board had authorized a new $1 billion buyback program.
Those announcements came after cryptocurrency brokerage Coinbase Global (COIN) said earlier this week that it would lay off 14% of employees as part of an AI push. Meta Platforms (META) late last month confirmed that it would reduce its workforce by 10% while doubling down on AI. Block (XYZ), which arguably kicked off the wave in February with its plan to slash more than 40% of its workforce, said Thursday that the leaner structure was paying off.
See also: Block earnings show a growth pickup, in a potential validation of the massive AI push
&#34;Technology companies continue to announce large-scale cuts and are leading all industries in layoff announcements,&#34; said Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray &amp; Christmas, in a blog post.
He added: &#34;Regardless of whether individual jobs are being replaced by AI, the money for those roles is.&#34;
Overall, AI accounted for about 16% of all job-cut plans for the year as of April, up from 13% as of March, according to the Challenger data. AI has been the third-leading factor behind layoff announcements, the blog post noted.
Read: Coinbase will lay off 14% of its staff as AI spurs 'a new way of working'
Recent announcements have been met with mixed market reactions. Block's layoff disclosure in February was followed by a 17% stock jump in the next trading session. Shares were up 8% in after-hours action Thursday as the company said its AI efficiencies helped drive upbeat financial results.
But Cloudflare shares were off 19% in extended trading following the layoff announcement. Upwork's stock was down 18%, while Bill's was up more than 7%. The three companies reported earnings as well, so the stock moves likely reflect a multitude of factors.
Whether AI is fully the cause of the latest job cuts is unclear. After Block's announcement, critics said the company had overhired for years and wondered if the company was using AI advancements as an excuse to walk back those moves, an argument that CEO Jack Dorsey disputed at time.
It also remains to be seen if the moves pay off pay off over the long run. Coinbase's recent announcement made some social-media users wonder if it was actually a good thing for nontechnical staffers to dabble in coding, even with AI assistance.
Owen Jennings, Block's business lead, told MarketWatch that while 100% of staffers at his financial-technology are now using AI at work, &#34;any production change is going to be reviewed by the software engineering team.&#34;
-Emily Bary -William Gavin
This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
05-07-26 2017ET

UPWK

BILL

The tech sector is experiencing significant layoffs, with companies like Cloudflare, Upwork, and Bill Holdings announcing cuts due to increased AI usage. Cloudflare plans to reduce its workforce by 20%, citing a 600% rise in AI utilization. Upwork's CEO noted the shift towards smaller teams, while Bill Holdings aims to become AI-native, reducing up to 30% of its staff. These layoffs reflect a broader trend, with AI accounting for 16% of job cuts this year. Market reactions have varied, with some companies seeing stock increases while others faced declines after announcing layoffs.

AI is coming for your job after all. These new announcements prove it.