Post Covid pandemic reality bites as Zoom confirms it will axe 15 percent of its workforce, which impacts 1,300 jobs
Job losses in the tech sector continue this week with the news that Zoom Video Communications is to axe a sizeable portion of its workforce.
According to a blog post by CEO Eric Yuan that was shared with Zoom’s staff (known as Zoomies),the firm grew quickly during the Covid pandemic lockdowns, but the increase in staffing levels was not sustainable.
It comes after Dell earlier this week became the latest big name tech firm to announce layoffs with its decision to terminate 6,650 jobs.
Zoom job losses
In his blog post, Eric Yuan said that the firm has “made the tough but necessary decision to reduce our team by approximately 15 percent and say goodbye to around 1,300 hardworking, talented colleagues.”
“I know this is a difficult message to hear, and certainly not one I ever wanted to deliver,” he wrote. “If you are a US-based employee who is impacted, you will receive an email to your Zoom and personal inboxes in the next 30 minutes that reads [IMPACTED] Departing Zoom: What You Need to Know.”
Zoom staffers outside the US will be notified following local requirements.
“For those Zoomies waking up to this news or reading this after normal work hours, I am sorry you are finding out this way but we felt it was best to notify all impacted Zoomies as soon as possible,” he wrote.
Yuan wrote demand for the company’s video conferencing services has slowed with the waning of the pandemic, the firm is taking a related charge of up to $68 million.
News of the job cuts pleased investors and its shares, which fell 63 percent last year amid a decline in technology shares, closed up 9.9 percent on the news.
Departing full-time Zoomies in the US will be offered up to 16 weeks’ salary and healthcare coverage plus payment of earned FY’23 annual bonus based on company performance, as well as other benefits.
For those Zoom staff outside the US, they will receive similar benefits that will take into account local laws.
Reasons for layoffs
“Our trajectory was forever changed during the pandemic when the world faced one of its toughest challenges, and I am proud of the way we mobilised as a company to keep people connected,” wrote Yuan.
“To make this possible, we needed to staff up rapidly to support the quick rise of users on our platform and their evolving needs,” he wrote. “Within 24 months, Zoom grew 3x in size to manage this demand while enabling continued innovation.”
“We worked tirelessly and made Zoom better for our customers and users. But we also made mistakes,” he added. “We didn’t take as much time as we should have to thoroughly analyse our teams or assess if we were growing sustainably, toward the highest priorities.”
“As the world transitions to life post-pandemic, we are seeing that people and businesses continue to rely on Zoom,” wrote Yuan. “But the uncertainty of the global economy, and its effect on our customers, means we need to take a hard – yet important – look inward to reset ourselves so we can weather the economic environment, deliver for our customers and achieve Zoom’s long-term vision.”
The video conferencing software maker said that its executive leadership team will reduce their base salary by 20 percent in the same period, and Yuan will take a substantial pay cut.
“As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today – and I want to show accountability not just in words but in my own actions,” the CEO wrote. “To that end, I am reducing my salary for the coming fiscal year by 98 percent and foregoing my FY23 corporate bonus. Members of my executive leadership team will reduce their base salaries by 20 percent for the coming fiscal year while also forfeiting their FY23 corporate bonuses.”