Zoom Layoffs May Be Thanks to Microsoft's UC Dominance

Video conferencing and contact center giant Zoom is the latest Silicon Valley-based tech firm to notify its employees of layoffs. This round, it said, will impact some 150 workers, or 2% of its total workforce. 

Channel Futures has verified that layoffs impacted at least one of Zoom's marketing team members, and Brian Colin, who led enterprise sales in the West. Zoom announced it would release its financial results for the fourth quarter and full fiscal year 2024 on Feb. 26, begging the question, are these Zoom layoffs finance-related?

Robert DeVita, founder and CEO of Mejeticks, a tech advisory firm, says no, calling it "an internal unified-communications-as-a-service (UCaaS) squeeze as "companies shift from market share to profitability.

"We regularly evaluate our teams to ensure alignment with our strategy," a Zoom spokesperson told Channel Futures. "As part of this effort, we are rescoping roles to add capabilities and continue to hire in critical areas for the future.”

Those "critical areas," we learned, are artificial intelligence, sales, product and operations.

Zoom Layoffs Could Be Due to Microsoft's Dominance 

Zoom layoffs come down to a couple of factors, says DeVita.

Mejeticks' Robert DeVita

"I think some of this is rightsizing the organization; for instance, organizations have quickly realized they don’t need two or three channel managers to cover Texas and will be going with one or two going forward." 

Related:Updated Telecom-IT Layoff Tracker September 2023: Cisco, Ingram Micro, Trellix, T-Mobile, More

Alternatively, DeVita shared that some layoffs come with the territory, calling it "weeding out lower-performing people," something he said gets put on full display as UCaaS companies replace people almost immediately after letting them go. 

We saw this notion in action at 8x8. The unified communication vendor underwent a round of layoffs last month, with several senior sales team members getting the boot. The company swiftly replaced one of those executives, tapping its competitor's talent by hiring ex-Twilio, Microsoft and Oracle executive Brian Paterson to head its North American sales division.

We even saw LiveVox layoffs hit its channel and sales team after NICE acquired it, with entire teams getting laid off. One industry analyst, Irwin Lazar, president and principal analyst at research firm Metrigy, believes Microsoft is the true culprit.

"Microsoft's growing market share in the unified communications (UC) space has forced competitors to reshuffle, with many focusing more on Microsoft integration and contact center," said Lazar.

Metrigy's Irwin Lazar

With UCaaS maturity on the horizon, Lazar said, "UCaaS market growth is slowing."

Likewise, according to Metrygy data, most of those who still reside on-premises plan to remain that way citing various motivations. For this reason, Lazar said Megrigy forecasts small growth in the UCaaS market in 2024.

Zoom's Explosive Pandemic Growth Led to 'Reset

Zoom experienced astronomical growth during the pandemic when most of the world seemed to have flocked to its software, making it a household name. Rob Hilsen, co-founder and principal consultant at LookNow Agency, said that growth has slowed and caused the firm to "reset."

"And I know other CX vendors are approaching budgets with caution. These, though, seem largely confined to the larger companies. My business with startups, by comparison, and not exactly a litmus for the overall market, is very strong," Hilsen told us.

Hilsen said he suspects "the bean counters generally take proactive steps to ensure they're covered for whatever happens in 2024," noting that the market is volatile.