Reported Layoffs at Oracle Cloud Come as 'No Surprise'
The move comes as “no surprise … even in a growth area,” one analyst tells Channel Futures.
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Channel Futures: Why is Oracle Cloud implementing layoffs now? The cloud unit is growing, in both size and reputation.
Hyoun Park: We are currently in an economic slowdown in the IT world as every major vendor is seeing delays in closing business. Oracle has always been a disciplined company in terms of managing to the numbers, so it is no surprise to see Oracle lay off staff, even in a growth area.
CF: What’s the bigger picture here, regarding the Oracle Cloud layoffs?
HP: It is not uncommon to see tech companies reshape their talent pool with simultaneous sets of layoffs and hiring. Again, Oracle is definitely no stranger to this tactic as well. … Oracle is trying to reshape its talent portfolio to hire more from lower cost-of-living geographies when possible. Financially, Oracle would rather pay for salaries in, say, Idaho or New Hampshire, than for California and tech-heavy areas like the Research Triangle and Austin, if possible.
CF: It’s a slightly odd question, but do the layoffs in any way render Oracle CloudWorld as more of a dog-and-pony show?
HP: Oracle CloudWorld was definitely positioned to show Oracle’s strengths at a time when Oracle is still, at best, the no. 4 cloud vendor for IaaS. Oracle Cloud does have some significant advantages regarding total cost of ownership, reduced data export fees and interconnection with other clouds. Oracle CloudWorld was designed to show where Oracle Cloud continues to invest: health care, database services and integration with Oracle SaaS.
CF: Do the layoffs have anything to do with TikTok using Oracle Cloud exclusively, and the ongoing national security debates around that app? Why or why not?
HP: TikTok’s America traffic being supported on Oracle is a legitimately big deal, as TikTok is currently the second biggest website in the world. The TikTok/Oracle agreement is seen as a compromise to meet U.S. national security issues, as Oracle is seen as a relatively friendly company to U.S. government, military and security interests.
CF: Should channel partners be concerned about the layoffs? Why or why not?
HP: Channel partners should continue to see Oracle Cloud as a cost-efficient provider for the vast majority of storage and compute IaaS, and as a provider focused on being price conscious. Oracle’s approach to the cloud is focused on gaining data gravity and being an optimal environment for supporting Oracle SaaS and PaaS offerings.
CF: What’s the best way to view this week’s Oracle Cloud layoffs?
HP: These layoffs should be seen as an opportunistic rightsizing of talent to match Oracle’s business strategy rather than as any intention to exit the cloud or to weaken its cloud offerings.
Amalgam Insights still expects that 2022 will show that the global IaaS market grew over 35% this year, even with the fourth-quarter slowdown, which is six to seven times the general IT growth of between 5% and 5.5%, depending on whether one is looking at large enterprise or midmarket environments.
CF: What’s the best way to view this week’s Oracle Cloud layoffs?
HP: These layoffs should be seen as an opportunistic rightsizing of talent to match Oracle’s business strategy rather than as any intention to exit the cloud or to weaken its cloud offerings.
Amalgam Insights still expects that 2022 will show that the global IaaS market grew over 35% this year, even with the fourth-quarter slowdown, which is six to seven times the general IT growth of between 5% and 5.5%, depending on whether one is looking at large enterprise or midmarket environments.
Two weeks after its premier event, layoffs are hitting Oracle Cloud.
Business Insider reported that about 200 people have lost their jobs within Oracle Cloud Infrastructure. OCI employs around 10,000 people, so, in terms of percentages, the numbers are small, but the action is significant. More cloud computing and tech companies are instituting layoffs and hiring freezes as inflation wipes out gains and as a recession looms. And even though Oracle Cloud continues to get some traction against rivals Amazon Web Services, Microsoft Azure and Google Cloud, it is not immune to economic forces.
The cuts affect teams throughout OCI. Those areas include object storage, operations and support led by Dru Borden, and engineering architecture helmed by Pradeep Vincent, according to Business Insider. This round of layoffs comes after similar moves in August and October; the former impacted thousands of Oracle employees around the world, Business Insider reported.
Keep up with our telecom-IT layoff tracker to see which companies are cutting jobs and the ensuing channel impact. |
Oracle did not respond to requests for comment by the time of publication. The company also had not made any layoff-related filings with the Securities and Exchange Commission by that time.
Oracle CloudWorld
Amalgam Insights’ Hyoun Park
Just two weeks ago, Oracle held its annual CloudWorld event in Las Vegas. The company spent two days touting its capabilities and innovations, even bringing founder Larry Ellison on stage. There was no apparent undercurrent of fear or knowledge of pending cloud-group layoffs during the conference. On the contrary, executives took the stage to tout its wins, an achievement Synergy Research Group commented on just yesterday: “Oracle has seen a boost in its cloud growth rate this quarter,” analysts noted in a Nov. 1 blog.
To get more insight into the Oracle Cloud layoffs, we turned to Hyoun Park, CEO and chief analyst at research firm Amalgam Insights. See our slideshow above for Park’s thoughts.
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