Intuit, the tech giant known for its tax preparation and financial software, has announced a significant workforce reduction, laying off approximately 10% of its employees. The move, detailed in a Wednesday filing with the Securities and Exchange Commission (SEC), underscores the company's ambition to reallocate resources and invest heavily in AI technology.
CEO Sasan Goodarzi communicated the rationale behind the layoffs in an email to staff, emphasizing the company's commitment to innovation and growth. "We do not do layoffs to cut costs, and that remains true in this case," Goodarzi wrote. "The changes we are making today enable us to allocate additional investments to our most critical areas to support our customers and drive growth."
The layoffs, affecting 1,050 employees who were deemed not meeting the company's "elevated expectations," are part of a broader restructuring plan. Goodarzi highlighted that Intuit intends to hire approximately 1,800 new employees post-layoffs, aiming to bolster its capabilities in AI and other critical areas. This hiring spree is set to take place in fiscal 2025.
Among those affected, 384 employees in Mountain View, where Intuit is headquartered, and 215 in San Diego, will be let go, according to spokesperson Sara Day. Additionally, the company plans to shut down offices in Boise, Idaho, and Edmonton, Alberta, affecting around 250 workers. Some employees from these locations will be transferred to other sites.
The layoffs are part of Intuit's "Big Bets" strategy, which includes developing a generative AI-powered financial assistant. Despite the reductions, Goodarzi conveyed optimism about the future, stating, "we are positioned to take advantage of this AI revolution."
Goodarzi's email also outlined the severance packages for laid-off employees. In the U.S., affected workers will receive a minimum of 16 weeks of severance pay and six months of health insurance coverage. They will remain on the payroll until September 9, giving them 60 days' notice of their termination. The CEO thanked the departing employees for their contributions and promised to address any questions in a meeting scheduled for July 16.
By mid-morning Wednesday, many of the laid-off employees had already taken to LinkedIn, seeking new opportunities and announcing their departures. The rapid response from employees reflects the abrupt nature of the layoffs, despite the generous severance packages.
The market reaction to the announcement was swift, with Intuit shares dropping 3.6% in morning trading to $626.29 per share. The company estimates that the reorganization will incur costs between $250 million and $260 million, mostly in the fiscal fourth quarter ending July 31.
This restructuring is part of Intuit's broader strategy to maintain its competitive edge in a rapidly evolving technological landscape. "The era of AI is one of the most significant technology shifts of our lifetime," Goodarzi stated. "Companies that aren't prepared to take advantage of this AI revolution will fall behind and, over time, will no longer exist."
