Sharan Hegde Lays Off 15% of Employees, Turns to AI for Cost Efficiency

1% Club, the personal finance company, has cut 15 per cent of its employees' jobs as a measure to reduce costs and leverage artificial intelligence (AI). The move by the company came to light after its co-founder Sharan Hegde mentioned the layoffs in a post on the social media platform LinkedIn on November 6. Hegde said that the company has grown rapidly from a five-member team to around 200 employees in just two years. However, the growth with such a “lightning speed” has added redundant expenses, particularly with regards to hiring. 

“This is our first cost-cutting exercise since inception. We have identified significant AI-driven cost savings that can boost profitability and efficiency, which can be reinvested in business growth,” said Sharan Hegde, CEO of 1% Club, in a post on LinkedIn. To help the laid-off employees, the company has offered a severance package depending on the tenure and has extended support in getting them employed, he added. 

The co-founder also highlighted that the job cut is the first cost-cutting exercise since inception. 

Layoffs Driven by AI-adoption Increases 

1% Club isn’t the first company to cut jobs due to increasing adoption of AI in the workplace. The technology giant Google announced multiple rounds of layoffs in the beginning of 2024, particularly in its ad division. Although the giant didn’t mention AI as a driver behind the jobs cut, the move was coupled with a heavy AI deployment in customer care and ad sales processes. 

Since 2020, Microsoft Network (MSN) laid off a large number of journalists as it adopted AI to generate news content. 

The layoffs due to AI adoption have increased anxiety amongst employees across the globe, as many feel threatened that AI might take over their jobs. However, brushing aside the fear, Nvidia CEO Jensen Huang, at an AI Summit 2024 held in Mumbai in October, said those who fail to learn AI will be at a disadvantage. 

“AI can do 20 per cent of the stuff 1,000 times better. When people ask if AI is going to take their jobs, I say the person who uses AI to do those 20 per cent tasks will take your job,” said Huang. 

Also Read: Facing GenAI: Can Indian IT Companies Evolve To Turn a Global Monster Into an Ally?