The wave of AI layoffs has spread to the financial industry, with private equity giant Vista planning to cut 1/3 of its workforce. The CEO previously warned that "60% of people will be unemployed."

The AI-driven wave of layoffs is spreading from the tech industry to the financial sector. Vista Equity Partners, a private equity giant managing over $100 billion in assets, plans to significantly reduce its workforce, expecting to cut its employee count by one-third in the coming years through layoffs and reduced hiring.

On November 12, media reports indicated that Vista had informed investors of its plan to utilize AI tools to replace operational positions, some junior analysts, and investor relations staff, or to expand its business scale without adding new employees. The company's CEO, Robert F. Smith, had previously issued a stern warning, predicting that "60% of people will be unemployed" next year. This marks the beginning of a profound impact of AI on the operational models of traditional financial institutions.

This move highlights the structural impact of artificial intelligence on the employment market in the financial sector. Vista is not only applying AI on a large scale in its own operations but is also promoting the development and deployment of AI agents in dozens of software companies within its portfolio to achieve task automation. The company currently directly employs about 700 people, while its portfolio companies have a total of 10,000 employees.

Vista's aggressive strategy comes at a time when the U.S. labor market is sharply cooling. According to a Wall Street Journal article, the latest report from Challenger, Gray & Christmas shows that the number of layoffs in October surged to 153,000, the highest for the same month in over 20 years, with the rapid adoption of AI technology becoming a significant driver of this round of layoffs. From telecom giants to fintech companies, an increasing number of businesses view AI as a key tool for reducing labor costs. Goldman Sachs predicts that the unemployment rate may rise to 4.5% in the next six months.

Vista Leads AI Transformation in Finance

Vista Equity Partners is becoming a pioneer in the application of AI in the private equity industry. Reports indicate that, according to informed sources, this investment firm focused on software acquisitions plans to use AI technology to handle tasks such as preparing investor presentations, creating marketing materials, and aggregating data for new deal sourcing and analysis.

The company currently directly employs about 700 people, while its portfolio companies have a total of 10,000 employees. Vista is not only promoting the use of AI tools internally but is also actively encouraging employees to adopt these technologies to identify and analyze investment targets, and has begun to score companies based on their use of AI.

Vista is also reviewing its portfolio of dozens of software companies to identify areas where AI technology can create new opportunities or pose threats to existing business models.

The company hopes its portfolio companies will build AI agents capable of executing tasks with minimal human intervention and is exploring shifting the billing model of software companies from individual subscriptions to usage-based pricing.

Notably, CEO Robert F. Smith's previous public remarks have sounded the alarm for the entire financial industry. In June of this year, he stated in front of his private equity peers:

"We believe that next year, 40% of the attendees at this conference will have AI agents, while the remaining 60% will be looking for jobs."

The report cites informed sources stating that Smith's widely reported comments are intended to "spark controversy" and challenge financial executives to increase AI usage. Smith later stated that while AI will impact certain job positions, it will also create new employment opportunities.

AI Drives Structural Employment Changes

Vista is not the only institution in the financial sector to significantly reduce manpower through AI. The New York-listed "buy now, pay later" company Klarna has reduced its workforce from 7,400 to 3,000, with AI taking over the roles of departing employees.

The company's CEO, Sebastian Siemiatkowski, stated that AI will have a huge impact on "knowledge work," "not just in banking, but across society." While Klarna has drastically reduced hiring, it has utilized AI tools to fill the functions of existing positions.

British Telecom Group BT stated as early as 2023 that it expects 10,000 jobs to be replaced or managed by AI, as part of its plan to cut 55,000 positions. An increasing number of companies view AI as a way to improve efficiency and reduce labor costs.

As Vista's layoff plan is announced, the U.S. labor market is experiencing a sharp cooling. According to a report by Challenger, Gray & Christmas, the number of layoffs in October surged to 153,000, the highest for the month in over 20 years. The number of "Worker Adjustment and Retraining Notification" Act notices tracked by Goldman Sachs also reached a new high since 2016.

Goldman's analysis shows that AI has become a new driver of layoffs. Since the release of ChatGPT in November 2022, AI has quickly become a central topic in discussions about workforce numbers in the tech industry. In industries with high AI adoption rates, such as technology, finance, and real estate, companies are more frequently mentioning AI in discussions about layoffs.

According to Wall Street Insight, the latest data released by ADP shows that in the four weeks ending October 25, private enterprises reduced an average of 11,250 jobs per week, indicating that the private sector could lose about 45,000 jobs in the latter half of October, marking the largest monthly decline since March 2023.

Goldman's quantitative model predicts that the median and average U.S. unemployment rates may reach 4.5% in six months. The model shows that the probability of the unemployment rate rising by 0.5 percentage points or more in the next six months has reached 20-25%, while six months ago, this probability was only 10%.

Large companies such as UPS, Amazon, General Motors, Paramount, and Ford have announced layoff plans involving thousands or even tens of thousands of employees, highlighting that technology-driven structural changes are compounding the downward pressure of the economic cycle, significantly increasing future unemployment risks