Zoom has announced plans to lay off a significant portion of its workforce, with 1,300 staff members scheduled to be relieved of their duties.
The move means the video conferencing provider becomes the latest tech giant to make layoffs this year, joining Google and Microsoft in significantly reducing the sizes of their respective workforces.
Like many major tech companies, Zoom's growth has stagnated since national lockdowns decreased in frequency across the globe and remote workers have been allowed to return to their offices.
Zoom Employees Depart
The 1,300 workers being laid off by Zoom, which is now worth $24 billion, amounts to roughly 15% of the company’s payroll.
The company is axing a much higher percentage of its overall workforce than other big tech companies have – Google let around 6% of its staff go, while Microsoft made 5% of its employees redundant. It should be noted though that in both these cases, the number of employees affected was much larger than Zoom's layoffs.
“We work tirelessly and made Zoom better for our customers and users. But we also made mistakes,” CEO Eric Yuan explained in a recent statement. “We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably.”
The statement also detailed that departing Zoom employees will receive up to 16 weeks’ salary and healthcare coverage, payment of earned FY23 performance-based bonuses, and outplacement services including 1:1 coaching, networking groups, and workshops.
Zoom Goes From Exponential Growth to Stagnation
Zoom’s user base grew exponentially during the pandemic, as did its staff team. Between July 2019 and October 2022, the number of employees on Zoom’s books grew by 275% to a total of 8,422 workers.
However, like the other tech companies that benefitted from the unique economic and social conditions created by lockdowns, such as Amazon, Zoom’s growth has slowed as the world has gotten itself back up to speed.
Zoom may be feeling the pinch more than other tech companies due to the nature of its flagship video conferencing product, however, which was a core essential during the era of fully remote work, but is now not quite as crucial to the overall function of thousands of businesses, many of which are also struggling.
The bleak economic state of play the company – as well as its customers – finds themselves in has forced Zoom to “take a hard – yet important – look inward to reset ourselves” CEO Eric S. Yuan admitted.
Zoom Not Alone in Layoffs
Although Zoom has laid off a particularly high percentage of staff, the video conferencing behemoth is not the only tech company to overreach during the pandemic and its immediate aftermath.
Companies across the board are having to downsize their operations and make strategic decisions about which projects to keep afloat and which ones they should let sink, and we're seeing more businesses deploy initiatives like voluntary separation to try and avoid making redundancies.
With the global economic situation looking like it might get worse before it gets better, it will be no surprise if we see even more businesses hamstrung by their finances and forced to reduce their headcount as a result.