Fiverr Announces Major Layoffs in Push Toward AI Automation

Freelance services marketplace Fiverr has revealed plans to lay off approximately 250 employees, representing 30% of its total workforce. The significant staff reduction comes as part of the company's strategic shift toward becoming an AI-first organization.

Leadership Cites Fundamental Transformation

Company founder and CEO Michal Kafman announced the restructuring via social media platform X (formerly Twitter), framing the move as necessary for Fiverr's evolution. "The introduction of AI technology will lead to a fundamental transformation of Fiverr," Kafman stated, adding that the company needs to return to "startup mode" through what he called a "painful reset process."

The restructuring will result in a smaller, flatter organizational structure, with cuts affecting multiple departments across the company.

AI Promises Efficiency Gains but Raises Concerns

Kafman emphasized AI's potential to "free humans from tedious manual tasks" and unlock capabilities that were previously "impossible or too costly." The CEO promised severance packages and extended health insurance benefits for affected employees.

The move reflects broader industry trends, with companies investing nearly $40 billion in AI technology last year alone. Other tech firms facing similar workforce reductions include Indian services giant Tata Consultancy Services (TCS), which recently laid off over 10,000 employees while increasing wages for remaining staff.

Market Pressures Drive Changes

Fiverr's restructuring appears partially motivated by stock performance concerns. While the company reached an $11 billion market capitalization in February 2021, its current stock price hovers around $23 per share. Notably, shares experienced a slight decline following the layoff announcement.

The CEO had warned employees about impending changes as early as May, when he encouraged staff to adopt AI tools aggressively. Kafman suggested workers should aim for "100% automation" of repetitive tasks and challenged teams to double or triple their output quality and quantity per time unit.

Human Element Remains Central Despite Automation Push

Paradoxically, Kafman concluded his announcement by emphasizing how "AI actually forces us to rediscover humanity," highlighting the unique value each individual brings beyond automated processes.

The freelance platform joins numerous tech companies reevaluating staffing needs amid rapid AI advancements while balancing efficiency gains with human capital considerations.

Key Points:

• 🔹 Major workforce reduction: Fiverr cuts 30% of staff (250 employees) in shift toward AI-driven operations
• 🔹 Strategic reset: Company aims for flatter structure and startup-like agility through painful transition
• 🔹 Market context: Move follows industry-wide investments ($40B+) in AI technology adoption
• 🔹 Employee support: Severance packages and extended benefits offered to laid-off workers
• 🔹 Productivity goals: Leadership pushes for dramatically increased output through automation