Zoom is an online meeting and video conferencing tool that enables users to hold virtual meetings, webinars, and video chats.
It includes features such as screen sharing, virtual backgrounds, recording, and the ability to host meetings for up to 1000 people.
Zoom has seen widespread adoption due to the COVID-19 pandemic and the increasing trend of remote work. It was established in 2011 and is based in San Jose, California.
According to Zoom’s CEO, Eric Yuan, the company will lay off 1,300 workers, or 15% of its workforce. This announcement was made on the company’s official blog on Tuesday.
A combination of factors, including excessive hiring, hazy global macroeconomic conditions, and strong tailwinds, forced several tech companies to make job cuts in 2022.
These companies have continued their mass layoffs well into 2023. According to Reuters, Zoom Video Communications Inc., which plans to cut 1,300 jobs, will reportedly join the list of organizations on Tuesday.
Several tech companies have cut jobs due to a combination of factors, including over-hiring during more optimistic economic times, uncertain global macroeconomic conditions, and the impact of strong headwinds such as decreased demand for products and services or decreased investment.
Over-hiring during a strong economic period can lead to an oversupply of labor when economic conditions deteriorate.
The COVID-19 pandemic has also led to widespread uncertainty and slowed economic growth, resulting in decreased demand for many products and services and increased financial pressure on companies.
This has forced many tech companies to make tough decisions, including job cuts, to reduce costs and maintain financial stability.
“Over the past few years, Zoom has grown into a very big brand and has become a recognizable brand with a worldwide influence and a crucial platform for connecting individuals and institutions all around the world easily,” says the company.
Whether you joined Zoom early on or more recently, you have contributed significantly to its development, which makes today’s announcement all the more difficult.
“The company had to make a very difficult but very important and necessary decision to let 1,300 of our most talented and committed coworkers go and reduce our brilliant team by about 15%,” the CEO wrote in a blog post.
In the post-pandemic world, there is less of a need for video services, so Zoom announced on Tuesday that it will let go of roughly 1,300 workers.
Due to the popularity of its video conferencing tools during lockdowns, Zoom became well-known, and its revenue growth has slowed. Due to the increase in demand during the COVID-19 pandemic, the company increased its workforce.
However, it is now joining US businesses in cutting costs to prepare for a possible recession.
CEO Eric Yuan announced the layoffs along with his decision to forgo his bonus and accept a pay cut of 98% for the upcoming fiscal year. He claimed that the layoffs would affect almost 5% of the workforce.
To do this, I’m skipping my FY23 corporate rewards and slashing my pay for the beginning of the financial year by 98%.
For the upcoming fiscal year, “My executive leadership team members will forgo their FY23 corporate bonuses, as well as have their base salaries reduced by 20%,” Yuan stated on his blog.
Due to the pandemic boom fading out, Zoom Video’s shares decreased by about 90% as compared to October 2020. Following the announcement of the news, shares increased 9.9% at the close.
Yuan said, “We put in a lot of work, but we also made mistakes.” According to Yuan, “We didn’t spend as much time as we should have to analyze our teams thoroughly or figuring out whether we were moving sustainably towards our top priorities.”
According to Yuan, laid-off employees would receive a 16-week salary in addition to healthcare benefits and an annual bonus.
I realize that receiving this message was not simple and will be challenging, and I never meant to make it seem challenging or difficult. You will receive an email with the subject [IMPACTED] if you are a US-based employee who is affected.
Everything You Need to Know for Your Personal and Zoom Inboxes in the Coming 30 Minutes as Zoom Disconnects
Following local regulations, notifications will be sent to non-US employees. I’m sorry you’re learning about this way, but we felt it was best to alert all impacted Zoomies as soon as possible. For those Zoomies who are reading this in the morning or after regular business hours, “He went on to add.
The creator of video conferencing software also disclosed that the base salaries of its executive leadership team will be reduced by 20% during the same period.
Rishi Jaluria, an analyst with RBC Capital Markets, said: “I would say incrementally, possibly this is telling us we should really not expect reacceleration in the near-term on the money side, but we could see further upside to margins for a company that is currently profitable.”
To reduce costs, major corporations like Infosys, Microsoft, and Twitter recently announced similar initiatives.
As Covid declines internationally and major corporations discontinue work-from-home policies, many businesses are reducing their workforce.
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