Intuit Plans to Lay Off Approximately 1,800 Employees: A Bold Move Towards AI Integration

Intuit has reached a major turning point in its development with the decision to lay off 1,800 employees as part of its strategy transition towards AI and generative AI capabilities.

In a significant move that highlights the growing influence of artificial intelligence in the tech industry, Intuit, the parent company of TurboTax, has announced a major reorganization. The company plans to lay off approximately 1,800 employees, accounting for 10% of its workforce. This decision, however, is not driven by cost-cutting measures but by a strategic pivot towards AI and generative AI capabilities, which are poised to reshape its product offerings and business operations.

Embracing AI for the Future

Intuit has been a leader in providing innovative financial solutions through its products like QuickBooks, Credit Karma, and TurboTax. Over the past few years, the company has invested heavily in generative AI to enhance its accounting and tax preparation tools. This shift aims to offer more advanced, AI-powered services to small and medium-sized businesses, a critical segment for Intuit.

The company’s CEO, Sasan Goodarzi, highlighted in a note to employees that this transformation is part of a broader strategy to reallocate resources towards high-priority areas, including AI and generative AI. One of the flagship initiatives in this direction is Intuit Assist, a GenAI-powered financial assistant designed to revolutionize traditional workflows into AI-native experiences.

Workforce Realignment

The decision to lay off 1,800 employees is part of Intuit’s effort to streamline operations and reinvest in strategic areas. Notably, the company plans to rehire the same number of employees, primarily in engineering, product development, and customer-facing roles. This shift underscores Intuit’s commitment to enhancing its technical capabilities and customer service as it navigates the complexities of AI integration.

In the same note, Goodarzi explained that a significant portion of the layoffs—about 1,050 roles—are due to employees not meeting performance expectations based on a formal performance management process. The company believes that these individuals will be more successful outside of Intuit. Additionally, the company is reducing its executive roles by approximately 10% to accelerate decision-making processes and improve operational efficiency.

Impact on Employees and Sites

The restructuring will lead to the closure of two of Intuit’s sites in Edmonton, Canada, and Boise, Idaho, affecting over 250 employees. Some of these employees will be relocated to other sites, while others will leave the company. In addition, Intuit is eliminating more than 300 roles across the organization to streamline work and reallocate resources toward key growth areas.

Despite the layoffs, Intuit is committed to supporting its departing employees. All U.S. employees affected by the layoffs will receive a comprehensive severance package, including a minimum of 16 weeks of pay, plus two additional weeks for each year of service. They will have 60 days before their last day on September 9, ensuring that they reach key vesting and bonus eligibility dates. Employees outside the U.S. will get comparable assistance, modified to meet regional needs.

Financial Implications

Intuit is projected to pay between $250 million and $260 million for the layoffs; a significant portion of this expense is anticipated to be payable in the fourth quarter. These costs are primarily associated with severance packages and related expenses. Despite this financial impact, Intuit remains optimistic about its future growth and profitability.

In its fiscal year 2023, Intuit reported $14.4 billion in revenue, reflecting a strong financial position. The company also moved up 24 spots on the Fortune 500 list, underscoring its market strength. For the period ending April 30, Intuit reported revenue of $6.7 billion, a 12% increase from the previous year. This financial performance provides a solid foundation for the company’s ambitious AI-driven transformation.

Expansion Plans

Intuit’s strategic shift is not just about internal restructuring but also about expanding its market presence. The company plans to increase its investments in generative AI and expand into new markets, including Canada, the United Kingdom, and Australia. This international expansion is part of Intuit’s broader vision to leverage AI technologies to provide superior financial solutions globally.

Intuit is also streamlining 80 technical positions to locations such as Atlanta, Bangalore, New York, Tel Aviv, Toronto, and other places where it is expanding its technology teams. This consolidation is aimed at creating more efficient and collaborative tech hubs that can drive innovation and support the company’s AI initiatives.

Industry Context

Intuit’s move comes at a time when many technology companies are undergoing significant transformations. Since early 2023, major players like Microsoft, Google, Amazon, and Salesforce have announced substantial layoffs and strategic shifts to adapt to changing market conditions and technological advancements.

While Intuit had largely avoided large-scale firings until now, the company’s decision to lay off 1,800 employees and rehire in strategic areas reflects a proactive approach to stay competitive in an increasingly AI-driven industry. This approach aligns with the broader trend of tech companies prioritizing AI capabilities to enhance their products and services.

Summary

Intuit’s decision to lay off 1,800 employees as part of its strategic shift towards AI and generative AI capabilities marks a significant milestone in the company’s evolution. By reallocating resources and investing in high-priority areas, Intuit aims to provide more advanced financial solutions to its customers and maintain its competitive edge in the market.

The company’s commitment to rehiring in critical roles and expanding its market presence demonstrates a forward-thinking approach that balances immediate workforce adjustments with long-term growth strategies. As Intuit navigates this transition, it sets a precedent for how tech companies can leverage AI to drive innovation and redefine their workforce for the future.