UKG, citing a need to redirect its spending, cut more than an estimated 2,000 employees. But its hiring continues, with many jobs based in India, some with U.S. support roles.
UKG, the company formed through the merger of Ultimate Software and Kronos, recently cut its global workforce by about 14%. But it is still hiring, especially in Noida, India. Some of the positions are specifically for support of U.S. customers.
UKG, short for Ultimate Kronos Group, employed about 15,000 people in 2022, according to its Global Impact Report, but the company said it isn't disclosing its headcount at the time of the layoff. Using that number, the layoff would affect about 2,100 employees.
A private equity firm, Hellman & Friedman LLC, which owned Kronos, paid $11 billion for Ultimate Software in 2020. Blackstone is also an investor.
In a letter to employees about the cuts, UKG CEO Chris Todd said its organizational changes will allow the company "to aggressively focus on critical areas of growth and to provide flexibility to actively invest in important new areas." Kronos built its reputation on workforce management software and timekeeping systems, and Ultimate as an HR software vendor.
When asked by TechTarget Editorial how the layoffs will affect customers, a spokesperson said it will allow the company to redirect investments "in key areas of product innovation while enhancing how we support our customers."
UKG is a global company and continues to hire, but more than half of the 100 jobs sampled on its corporate site were based in India, with the remainder in the U.S., Europe and elsewhere. The company did not respond to a query from TechTarget Editorial about whether it was shifting more work to India.
Some of the Noida, India-based jobs listed on the site seek people with experience in U.S. payroll operations, including leading a payroll garnishment team. Garnishment is a legal process where employee earnings can be withheld to cover unpaid taxes, child support and other obligations.
Customers were not willing to pay the premium for U.S.-based support.
Holger MuellerAnalyst, Constellation Research
Holger Mueller, an analyst at Constellation Research, said other HR vendors were quicker to tap into the talent pool in India compared with UKG. Ultimate Software stayed in high-cost regions for too long, and Kronos only recently started utilizing Indian resources, he said.
Having local, U.S.-based resources is no longer a differentiator in the HCM industry, Holger said, and "customers were not willing to pay the premium" for U.S.-based support.
The merger resulted in significant overhead across functions, and the company's initial plan to manage this through attrition -- thereby avoiding layoffs -- was likely disrupted, Mueller said.
"The economic headwinds of 2024 have proven to be too much, and UKG is on a different growth -- and with that, cost -- curve," he added.
Mueller said he's not expecting the changes to cause disruptions for UKG's customers, and said the company is aware of the need to invest in product development. At a UKG analyst meeting last spring, the company said its R&D investment is growing, and that is the most critical aspect of UKG's business for its customers, he said.
Patrick Thibodeau is an editor at large for TechTarget Editorial who covers HCM and ERP technologies. He's worked for more than two decades as an enterprise IT reporter.
