In a significant move resonating across the tech landscape, Workday has announced layoffs affecting 1,750 employees, equating to approximately 8.5% of its workforce. The company’s strategic pivot comes during a pivotal juncture as it seeks to invest heavily in artificial intelligence (AI) to sustain growth.
CEO Carl Eschenbach addressed these changes in a memo shared with employees and filed with securities regulators. Eschenbach articulated the necessity of these layoffs, emphasizing Workday's focus on leveraging AI to redefine workplace processes globally. As we start our new fiscal year, we’re at a pivotal moment, he wrote, underscoring a vision where AI's burgeoning demand catalyzes growth opportunities.
Most affected employees were to be informed on Wednesday, with Eschenbach encouraging working from home to process the day's events. There is also a planned exit from certain office spaces as part of the restructuring, although specific details and locations remain undisclosed. However, this realignment is intended to optimize Workday's resources by targeting strategic locations for global operations expansion.
Despite these layoffs, Workday remains committed to hiring in various locations and roles wherever growth projects remain robust. The restructuring costs are projected between $230 million to $270 million, largely covering severance and related expenses. In the U.S., laid-off employees are guaranteed at least 12 weeks' severance, with additional compensation determined by tenure. Internationally, departing employees will receive packages in alignment with local labor standards.
The broader tech industry continues to experience similar personnel shifts. Giants like Intel, Cisco, and Apple have all faced workforce reductions amidst a turbulent environment shaped by changing consumer behaviors and an intensified focus on AI-driven solutions.
Amidst these challenges, Workday's fiscal health appears resilient. The company reported a noteworthy performance in its third quarter, achieving a net income of $193 million against a revenue of $2.16 billion, up from the prior period's $132 million net income on $2.09 billion revenue. Such figures demonstrate an upward trajectory as Workday plans to publish its full-year fiscal results for 2025 later this month.
Market reactions appear optimistic, with Workday's shares up by more than 2.5% during midday trading following the layoff announcement. As Workday navigates this transition, its strategic investments in AI position it at the forefront of technological innovation, with a hopeful outlook on reshaping the future of work.
