Workday Cuts Jobs to Invest in AI and Global Expansion
Workday recently announced a major restructuring, including job cuts, which it says are necessary to fuel future growth—particularly in the area of artificial intelligence. CEO Carl Eschenbach shared the news in a memo to employees on Wednesday, highlighting the company’s position at a pivotal moment as the tech sector continues to evolve.
According to Eschenbach, the growing demand for AI represents a significant opportunity for Workday to drive the next phase of its development. While the restructuring is difficult, he noted that the decision to reduce staff is part of a broader strategy to position Workday for success as businesses worldwide reimagine how work is done in light of new technological advancements.
Workday plans to notify the majority of affected employees on Wednesday, offering them severance packages based on their tenure. U.S. employees who are let go will receive a minimum of 12 weeks of pay, with additional weeks based on how long they have been with the company. Workers in other countries will receive packages in line with local standards. The company also expects to incur significant restructuring costs, ranging between $230 million and $270 million, to cover severance, employee benefits, and other related expenses.
As part of the restructuring, Workday is also planning to exit certain office spaces, although specific locations and timelines have not yet been disclosed. However, Eschenbach stressed that the company is still committed to expanding its global footprint by investing in strategic locations. Despite these job cuts, Workday intends to continue hiring in select areas over the coming year.
The decision to restructure comes as part of a broader trend within the tech industry. Companies like Intel, Cisco, and Apple have also implemented layoffs, with many focusing on reducing their workforce while ramping up investment in AI and other advanced technologies. The goal is to stay competitive in a rapidly changing market and adapt to shifting consumer demands.
Despite the restructuring, Workday’s financials show strong performance. For the third quarter of its fiscal year, the company posted a net income of $193 million and revenue of $2.16 billion, up from $132 million and $2.09 billion in the same period the year before. Following the announcement, Workday’s shares saw a notable uptick, rising by more than 2.5%.
Workday’s approach appears to be a blend of tough but strategic decisions aimed at long-term growth. The company is hoping that the changes will position it well as AI continues to transform the business landscape, allowing it to capitalize on new opportunities while still maintaining its workforce in key areas.
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