Zoom is laying off approximately 1,300 employees across departments due to a decline in demand for its services.
Zoom plans to lay off approximately 15% of its workforce which translates to 1,300 employees. The announcement is the latest in a slew of job cuts affecting the tech industry as the pandemic-driven demand for digital services wanes. In a memo to employees, CEO Eric Yuan said the downsizing would impact every part of the organization.
“We did not take a single departure lightly,” the Zoom CEO wrote. “Our leadership carefully examined and made decisions based on critical priorities for long-term growth, and also looked for functions that have become overly complex or duplicative.” As a result, some teams will experience structural changes to allow for investment in future opportunities.
However, the company’s current priority is supporting those leaving Zoom to make the transition as respectful and compassionate as possible. Employees whose positions are made redundant will still receive a salary for 16 weeks along with healthcare coverage. Yuan said he plans to reduce his own salary for the coming fiscal year by 98% and will forgo his 2023 corporate bonus.
Yuan also admitted that he made mistakes regarding company growth during the pandemic. “As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today,” he continued in the memo. “I want to show accountability not just in words but in my actions,” he added, leading into the news of his own pay cut.
Other members of the Zoom executive leadership team will also reduce their base salaries by 20% for the coming fiscal year and forfeit their fiscal year 2023 bonuses. The communications company rose to prominence during the early days of the pandemic, as people used the platform to video chat with friends and colleagues during global lockdowns.
Zoom also reported skyrocketing revenue in mid-2020 which was fueled by a spike in business customers as people were forced into remote work, CNN Business reports. As a result, the company rapidly hired more staff. “Within 24 months, we grew three times in size to manage this demand while enabling continued innovation,” Yuan wrote.
But the company’s stock declined significantly in 2022 as more workers returned to the office. “We will learn from the past to set ourselves up for future success and redouble our efforts to evolve for tomorrow,” Yuan continued. He added that Zoom is committed to ensuring that the layoffs are not made in vain.
Following the announcement, Zoom shares rose nearly 9% in midday trading. Other job cuts currently affecting the entire tech industry include Dell who announced plans to cut 6,650 jobs. In January, Google said it would be cutting 12,000 workers. Microsoft is axing 10,000 employees and Salesforce will retrench 7,000 workers, CNBC reports.
Additionally, Peloton, who like Zoom was also popular during the pandemic, has gone through several rounds of layoffs. The latest round of job cuts will see 500 jobs being eliminated, as the troubled exercise company looks to cut costs to improve its bottom line, CNN Business reported in October 2022. The move marks the completion of the vast majority of the company’s restructuring plan.