The American cloud-based financial management software vendor Workday announced on February 5 that the company is cutting nearly 2,000 jobs—or 8.5% of its workforce—with CEO Carl Eschenbach citing in a memo that the layoffs are necessary for ongoing growth efforts at the company, including a particular focus on artificial intelligence investments.
As reported by the Associated Press, Workday estimates that it will incur between $230 million and $270 million in charges related to its new restructuring plan, with the majority of the money going towards severance payments, employee benefits and other related costs.
Workday said all employees laid off in the U.S. will be offered a minimum of 12 weeks of pay, with additional weeks based on tenure. Eschenbach added that affected workers in other countries will be offered packages based on local standards.
"As we start our new fiscal year, we're at a pivotal moment," Eschenbach wrote in the memo. "Companies everywhere are reimagining how work gets done, and the increasing demand for AI has the potential to drive a new era of growth for Workday."
Similarly to Workday, other major tech companies such as Intel, Cisco and Apple have had rounds of layoffs over the past year amid a broader wave of industry consolidation. Many have turned to restructuring to stay competitive with evolving consumer spending while boosting AI-related investments.
In the memo, Eschenbach added that the company aims to notify the majority of employees affected by the cuts on Feb. 5 and encouraged employees to work from home or head home for the day. "I realize this is tough news, and it affects all of us," he said.
Despite the 1,750 layoffs, the company said it still expects to continue hiring in certain locations and positions over the next year, with Eschenbach noting that the restructuring will work to expand the company's global reach by "investing in strategic locations," although the timeline or which locations may be impacted was not specified.
