Block, the financial technology company co-founded by Jack Dorsey, will reduce its global workforce from over 10,000 employees to just under 6,000 in a single, sweeping round of layoffs. In a memo posted on X on Thursday, CEO Dorsey stated the decision was made despite the company's strong business performance and growing profits.

The move represents a stark departure from the recent tech industry trend of multiple, smaller rounds of job cuts. Dorsey argued that repeated layoffs are "destructive to morale," focus, and trust, preferring instead to "take a hard, clear action now." The company's shares rose over 20% in after-hours trading following the announcement.

A New Playbook for Corporate Downsizing

In his public memo, Dorsey framed the decision as a necessary adaptation to a technological shift. "We're already seeing that the intelligence tools we're creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company," he wrote. He later added on an earnings call that Block is ahead of a trend "all companies will eventually" adopt in using AI for efficiency.

Industry analysts noted the strategic signalling behind such a drastic cut. Michael Blank, an assistant professor of finance at Stanford Business School, suggested CEOs might race to convince investors they are best positioned for the AI era, with mass layoffs being a potentially "inexpensive way to signal that."

Reactions and a Warning of a 'Ripple' Effect

The scale of the layoffs—over 40% of the workforce—prompted immediate reaction from other tech leaders. Jessica Verrilli, managing director and cofounder at Adverb Ventures, posted on X: "Feels inevitable this is about to ripple through every public company."

This sentiment echoes broader warnings about AI's impact on white-collar work. Anthropic CEO Dario Amodei has warned of a looming white-collar "bloodbath," while Meta CEO Mark Zuckerberg has highlighted AI's role in reshaping employee output. Fintech firm Klarna has been explicit, with CEO Sebastian Siemiatkowski stating its workforce has halved since 2022 and is expected to drop below 2,000 by 2030.

Context of AI Anxiety and Economic Forecasts

Block's announcement follows a viral February 22 report from research firm Citrini, which painted a predictive scenario where AI growth proves detrimental to the broader economy, causing stock market jitters.

However, not all forecasts are uniformly bleak. The World Economic Forum's 2026 Global Risk report predicts that while 92 million roles may be displaced by AI and automation by 2030, 170 million new roles could be created, resulting in a net increase in jobs.

Brooks Holtom, a professor of management at Georgetown University, told Business Insider that while Block's single-cut approach avoids the "chronic anxiety" of repeated layoffs, the size of this reduction is "a pretty extreme example." He noted, however, that the severance packages offered were "relatively generous."