Dive Brief:
- Zoom laid off 1,300 workers Tuesday, 15% of its workforce, responding to an economic downturn that hit hard after a pandemic-era growth spurt.
- The uncertain global economy, and its effect on customers, led the company to take “a hard – yet important – look inward to reset ourselves so we can weather the economic environment,” said CEO Eric Yuan in an email sent to employees Tuesday and published on the company’s website.
- Yuan will also reduce his salary for the next fiscal year by 98%, and forego his corporate bonus for FY 2023. Yuan earned a base salary of $300,000 last year as part of a total compensation package worth $1.1 million, according to an SEC filing.
Dive Insight:
Layoffs at Zoom add to a clear trend emerging across technology vendors: businesses are pulling back on staffing gluts — built on high pandemic-era profit margins — as customers, eyeing an uncertain economy, scrutinize spend.
Salesforce is among the companies sounding off on tighter customer spend. Customers were showing “intense customer scrutiny on every investment dollar,” CFO Amy Weaver said during a November earnings call.
A wave of layoffs has hit the who’s who of large enterprise technology providers: Salesforce, Amazon, Microsoft, Google, IBM and Dell Technologies have all laid off staff in the last two months.
“We continue to see [foreign exchange rate] pressure and heightened deal scrutiny for new business but remain focused on delivering happiness to our customers by innovating our platform and expanding our go-to-market capabilities,” said Yuan, speaking Nov. 21 during the company’s Q3 earnings call, for the period ending Sept. 30.
Despite the rough terrain enterprise technology providers have encountered this year, worldwide IT spending is still set to grow, according to Gartner projections. Global IT spending will reach $4.5 trillion this year, a 2.4% year-over-year jump. Forrester projects enterprise IT spending in the U.S. will grow 5.4% this year, down from last year’s 7.4%.
