By Utkarsh Shetti, Manya Saini and Romolo Tosiani
Feb 27 (Reuters) – Jack Dorsey is not the first chief executive to say artificial intelligence will transform work. He may be among the first to act as if it already has – and to say so openly.
“Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally. A significantly smaller team using the tools can do more and do it better,” Block CEO and co-founder said in a statement on Thursday.
“I don’t think we’re early to this realization. I think most companies are late,” he added as he laid out plans to cut over 4,000 jobs, nearly half the company’s workforce, as part of an overhaul to embed AI across the fintech’s operations.
Block shares rose sharply on Friday, underscoring how markets are increasingly rewarding companies that present AI not as an experiment but as a driver of structural change.
Dorsey also delivered a blunt warning to peers: most companies are behind the AI curve and will reach the same conclusion within a year.
“I’d rather get there honestly and on our own terms than be forced into it reactively.”
Until now, most executives have resisted those kinds of sweeping conclusions even as their firms pour billions into the technology.
The comments are likely to sharpen a growing debate among executives, economists, investors and policymakers: is AI primarily a tool that helps workers do more – or one that enables companies to do the same with far fewer people?
AI JOB CUTS ACCELERATE
AI-linked layoffs have been rising worldwide.
According to a Reuters tally, companies have announced more than 61,000 job cuts tied to AI, including Amazon, Pinterest and Australia’s Wisetech since November.
But Block is among the highest-profile companies to cite AI explicitly as the primary driver of its reductions, rather than a secondary efficiency gain.
Some investors argue that automation-related cuts are partly correcting for years of overhiring.
“AI is the new scapegoat,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management, on Friday.
Still, markets are increasingly uneasy about AI’s potential to upend jobs and profits amid an uncertain global economic backdrop.
A widely circulated report this week by Citrini Research outlined a 2028 scenario in which unemployment rises to 10.2%, driven by rapid displacement of workers in software, logistics and delivery roles.
BUSINESSES HAVE BEEN MORE GUARDED
Evidence is emerging that firms are beginning to see returns on their investment.
Morgan Stanley analysts said this week there has been a steady rise in the number of companies reporting quantifiable benefits from AI adoption, based on an analysis of more than 10,000 earnings calls and fourth-quarter conference transcripts.
Some 21% of S&P 500 companies mentioned at least one measurable benefit, up from 15% in the third quarter and 10% in the final quarter of 2024. Greater AI use will boost companies’ profit margins by 40 basis points this year, they estimate.
But until now, most executives and policymakers have been more guarded than Dorsey when talking about AI and jobs.
“What we are seeing for the moment is that it’s increasing productivity,” ECB President Christine Lagarde told a committee of the European Parliament on Thursday.
“But we are not yet seeing consequences in terms of labour market and waves of redundancies that are feared, and that you know we will be extremely attentive going forward.”
At the World Economic Forum last month, JPMorgan Chase CEO Jamie Dimon said jobs would disappear but new ones would emerge.
On Friday, Bank of America global economists Claudio Irigoyen and Antonio Gabriel said AI could ultimately affect a quarter of all jobs.
AI shock, they said, will be disruptive for companies that do not survive and for workers who are displaced, but the economy will be better off because it will create new jobs and business opportunities that were previously prohibitive.
Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors, warned of unintended consequences from drastic steps like Block’s.
“Dorsey’s strategy suggests that less is more and that human capital has lost its competitive edge,” he said.
“The question is whether the company is resetting to its smaller, nimbler startup days or whether it might lose the creativity and human intuition that built its most iconic products in the first place.”
(Reporting by Utkarsh Shetti and Manya Saini in Bengaluru, Romolo Tosiani and Philippe Leroy Beaulieu in Gdansk and Francesco Canepa in Frankfurt;Writing by Josephine MasonEditing by Louise Heavens)
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