EarthLink on Layoffs: Channel 'Remains Strategic' to Growth

EarthLink last week laid off a reported 495 people, including some sales engineers, according to social media posts.

The Atlanta-based company late Monday confirmed that job cuts took place, but did not say how many. EarthLink said it would provide only the following statement:

To further accelerate EarthLinks transformation to an IT services provider, we are modifying our direct sales model somewhat,” Michele Sadwick, EarthLink’s vice president of strategic marketing, said in an email. “This resulted in reductions in our direct sales force but had no impact on our channel partner program. In fact, the channel partner program remains strategic to EarthLinks future growth and we plan to continue to invest in the channel.”

Brian Washburn, research director of network services for Current Analysis, said the losses likely affected EarthLink’s small business units the legacy One Communications and ITC^DeltaCom groups as well as staff on the consumer side. EarthLink wants to target enterprise and multilocation users; it has been moving away from integrated T1 customers for months, Washburn said. 

The news appears to be a boon for partners. Many have argued over the years that carriers spend too much money on direct sales forces and would save overhead and thereby earn more profit by relying on indirect partners for revenue. Unlike direct salespeople who are paid salaries and benefits, agents and VARs pay for their own expenses, such as health insurance and office space, and are only paid on performance. Fewer direct salespeople also reduces the channel conflict with indirect sales agents.

“I think that, overall, EarthLink is going back to the New Edge Networks days very friendly to the channel and going to continue to be very friendly to channel sales,” Washburn said.