After expanding its staff by three times in the span of 24 months during the pandemic, cloud-based videoconferencing service provider Zoom on Wednesday said that it was laying off 15% of its workforce, fearing uncertain macroeconomic conditions.
“We have made the tough but necessary decision to reduce our team by approximately 15% and say goodbye to around 1,300 hardworking, talented colleagues,” CEO Eric Yuan wrote in a blog post.
The chief executive chalked up the downsizing activity to the company’s failure to grow sustainably during the pandemic.
“We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities,” Yuan wrote.
Zoom experienced an unprecedented rise in demand during the pandemic, as most enterprises went into work-from-home mode, and this forced the company “to staff up rapidly to support the quick rise of users on its platform and their evolving needs,” Yuan wrote.
However, with the effects of the pandemic subsiding and global economic uncertainty affecting customer spending, the company decided to lay off 1,300 staffers, Yuan said.
US-based employees who have been let go, according to the company, are being offered salary and healthcare coverage up to 16 weeks, a fiscal year 2023 bonus based on company performance, stock option vesting for six months, and outplacement services.
Staffers outside the US are being offered similar benefits, the company added.
Leadership to take pay cuts
Along with the 15% reduction in the workforce, Zoom is also making changes in team structure and several members of its leadership team will take pay cuts.
Yuan, taking responsibility for the company’s mistakes, said that he would be reducing his salary for fiscal year 2023 by 98% and would be forgoing his fiscal year 2023 corporate bonus.
“Members of my executive leadership team will reduce their base salaries by 20% for the coming fiscal year while also forfeiting their FY23 corporate bonuses,” Yuan added.
Streak of layoffs continue to hit the tech sector
Layoffs due to overstaffing, slowing demand and uncertain macroeconomic conditions have continued to plague the tech sector since August last year. Last month, technology companies have laid off more employees than in any other month since the start of the COVID-19 pandemic.
Continuing supply chain issues, inflation, and the war in Ukraine are also having an impact on both business and consumer spending, leading to fears of recession.
Zoom becomes the latest to join technology majors such as Oracle, Microsoft, Amazon, Meta, Google, Salesforce, HP, Intel, and Dell Technologies to lay off several employees either due to rising costs or a slump in demand — or both.