How Five9 Layoffs Could Impact Broader Channel

Cloud contact center provider Five9 has announced a round of layoffs amounting to 7% or roughly 180 employees. Revealed via an SEC filing, the firm says the overarching goal looks to increase shareholder value.

Five9 layoffs will take effect by the end of 2024, and the company says it has started notifying those employees impacted by the cuts, a process which started yesterday. Five9 CEO Mike Burkland stated that the employees affected would receive severance and help with job transitioning.

As Five9 aims to drive more shareholder value, its revenues continue climbing as it keeps making a name for itself in a market with many other comparable contact-center-as-a-service (CCaaS) solutions.

"As Five9 continues its focus on profitable growth and business resilience, we have made the difficult but necessary decision to reduce our global workforce by approximately 7%," a spokesperson for Five9 told Channel Futures, "We remain focused on serving the needs of our global customers and remain committed to our global partners. These changes allow us to continue focusing on profitable growth and long-term business resilience. Our commitment to innovation and customer satisfaction remains as strong as ever."

David Smith, founder and principal of InFlow Analysis, told Channel Futures that Five's layoffs have implications for the broader contact center channel.

Related:Five9 Touts Partner Opportunity with New AI Knowledge Solution

InFlow's David Smith

"As Five9 reduces its workforce, it may rely more heavily on its channel partners to support customer implementations and provide additional services," Smith said.

He says the move could present opportunities for channel partners to expand their business and increase revenue.

"However, it's essential for channel partners to adapt to the changing market dynamics and invest in the necessary skills and resources to meet customer needs, which continue to evolve," he said.

Despite laying off approximately 180 employees, Five9 continues to surpass expectations on many fronts. Last quarter, Five9 became the third CCaaS vendor to announce it has more than $1 billion in annual CCaaS revenue, a feat it shared during its second-quarter earnings call.

Genesys and Nice are the other two CCaaS vendors that have done so. Five9 is also making headways on the acquisition front, announcing two weeks ago its intent to acquire customer engagement platform developer Acqueon.

Five9 Layoffs: A Sign of More to Come

As we have seen repeatedly in recent weeks, tech firms in the unified communications space are laying off employees left and right.

Cisco recently announced a 7% workforce reduction, more than 5,500 employees, putting at its pre-pandemic numbers. It also announced the reshuffling of three high-profile executive positions that impacted its flagship Webex platform.

Related:A Down Quarter for Five9? Partners Don’t Think So

Avaya pulled a similar move in July, reducing its workforce by 3%. Smith tells Channel Futures that Five9's layoffs are a sign of the times, adding, "It is a reflection of the challenging economic conditions and competitive landscape in the contact center industry."

While the job cuts may have short-term consequences, Smith shares that they could also lead to long-term advantages for the company.

"By focusing on profitability, investing in emerging technologies, and strengthening its channel partnerships, Five9 can position itself for success in the competitive contact center market," the analyst notes," Smith said.

It also comes down to CCaaS market crowding, as many of the vendors in the space offer strikingly similar solutions.

"It's forcing companies to optimize their operations and improve efficiency," he said.

The rise of generative artificial intelligence (AI) has thrown vendors another monkey wrench, Smith believes.
"AI and automation are changing the nature of contact center work, disrupting traditional job functions and necessitating adjustments to workforce structures," he said.