Workday Layoffs of 1,750 Help 'Better Align' for AI InvestmentWorkday Layoffs of 1,750 Help 'Better Align' for AI Investment

A new restructuring plan from Workday will shed 1,750 people as the software company makes plans to "prioritize its investments."

The Workday layoffs will cut 8.5% of the company's workforce and cost between $230 million and $270 million. Between $60 million and $70 million in charges will come in the current quarter, which is the fourth in Workday's fiscal year. Severance accounts for between $145 million to $175 million of total charges, with each affected U.S. employee getting a minimum of 12 weeks' pay.

Workday Layoffs

CEO Carl Eschenbach, in a public memo to employees, said the company started reaching out to them on Wednesday. He wrote that the demand for AI has created a "massive opportunity" for his company.

Workday's Carl Eschenbach

"... We need to make some changes to better align our resources with our customers' evolving needs," Eschenbach wrote. "This means investing strategically, helping teams work better together, bringing innovations to market faster, and making it easier for our customers and partners to work with us."

Workday in its fiscal year 2024 third quarter (ended Oct. 31), posted revenue growth of 15.8%. Profit grew 69% year-over-year from $114 million to $193 million in the quarter.

New Investments and Priorities

Eschenbach said Workday will hire in areas and locations of strategic focus in the upcoming fiscal year.

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"We're also prioritizing innovation investments like AI and platform development, and rigorously evaluating the ROI of others across the board," he said.

There are certain global locations where Workday has planned more investment, but Eschenbach didn't specify where. He said Workday is "evolving our processes" and "clarifying roles and responsibilities."

"I realize this is tough news, and it affects all of us — the 'Workmates' who are leaving and those who’ll continue with us," he said. "I encourage you to work from home or head home, if you’re already in the office."

San Francisco Gate reports that 617 people at Workday's headquarters in Pleasanton, California, will lose their jobs, per a WARN notice.

Workday also expects to incur about $35 million for exiting "certain owned office space."