March 30, 2023
Rackspace Technology, a cloud reseller and integrator, has announced a restructuring plan that will result in the layoff of nearly 4% of the company’s global workforce due to a decline in cloud computing growth rates. CEO Amar Maletira explained to employees in a memo that the company needed to brace itself for potential future challenges.
Following a ransomware attack in December, the company has already implemented cost-cutting measures such as reducing third-party costs and non-labor spending, deferring merit cycles, and implementing a hiring freeze. According to Maletira, these actions have proven insufficient to deal with the current uncertain macroenvironment.
Job cuts are affecting certain Rackspace employees in the United States, and those located outside the United States will soon face similar consequences. The last day of work for affected employees will be determined by their company’s needs, and some may be required to transfer their duties and obligations.
Rackspace, which was previously in direct competition with major cloud providers, now focuses on reselling and advising clients on multi-cloud solutions, as well as providing fully managed hosting services and other related offerings.
In 2022, the company reported a $679 million loss from operations on $3.122 billion in revenue, compared to a $2.5 million loss on $3.009 billion in revenue the previous year. Local HR lead Katerina Frolich mentioned lengthening sales cycles, Q4 losses, and an ongoing organizational transformation across the company in a separate email to UK employees.
According to a company spokesperson, the layoffs represent less than 4% of the company’s global workforce, which currently employs around 6,800 people. Despite the downturn, Rackspace remains committed to executing its strategy and plans, which include investing in strategic areas of growth in the multicloud market.
The sources for this piece include an article in TheRegister.
