Cash-strapped WeWork will be laying off 2,400 of its employees, which account for upto 20% of its workforce. This move has been much anticipated for some time now – after the company was taken over by – SoftBank. The company that once saw a valuation of $47 billion has now been under severe financial pressure, after the failed IPO and has been trying hard to control its costs.
These lay-offs are crucial to the cost cutting, as the company had become quite bloated – with their focus spreading all over. The job cuts is seen as one of the biggest move yet by SoftBank Group Corp, which had to rescue WeWork, by infusion of additional capital to the tune to $9.5 billion. SoftBank now has around 80% control of WeWork. After the WeWork debacle, SoftBank has become more stringent towards the financial viability and profitability of its funded startups.
In their statement to Reuters, WeWork said, “As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organization.”
Key areas that will see a major impact of the proposed job cuts are WeWork’s architecture unit and its technology department that includes coding and software teams. Until June 30, the company had 12,500 employees and many others that work for affiliates and partners.
New York-based WeWork commented on the layoffs to Reuters, “This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition.”
Artie Minson and Sebastian Gunningham are the current co-CEOs, who are running the show since September post resignation of its co-founder Adam Neumann.
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