Workday layoffs nearly offset last year's hiring
Workday cut 1,750 jobs to shift focus to AI growth. The HR software vendor calls it a strategic move, as vendors ramp up AI-related competition.
Workday will layoff 1,750 employees or 8.5% of its workforce, nearly matching last year's hiring increase.
In an email to employees, the HR software vendor said the job cuts is in response to shifting AI development needs and the uptick in customer demand for AI tools.
Workday securities filings reported 18,800 employees in January 2024. But as of last October, its global headcount was at more than 20,400, according to a company investor presentation. This layoff reduces the October figure to 18,650.
Josh Bersin, an independent HR industry analyst, said that Workday, like Salesforce and other software companies, "are shifting resources toward AI products and sales, so one justification for this is a need to redeploy people into these new growth areas. In reality, however, a more sound approach here is to redeploy engineering and sales people and one would hope Workday would use this approach to the transformation."
But Bersin also said that Workday needs to increase profitability as growth slows, including in revenue per employee.
Workday’s stock price rose more than 6% following news of the layoff.
Strategic AI investment
In the internal email to employees, Workday CEO Carl Eschenbach said it will continue to hire "in key strategic areas and locations."
"Companies everywhere are reimagining how work gets done, and the increasing demand for AI has the potential to drive a new era of growth for Workday," Eschenbach said in the email.
Evelyn McMullen, an analyst at Nucleus Research, said Workday's cuts aren't necessarily linked to AI-driven efficiencies but are more a response to industry-wide trends, especially as tech vendors compete primarily through AI investment.
However, McMullen questions whether customer demand for AI tools is as strong as vendors claim. At many larger companies, "security concerns and internal policies have barred the full breadth of adoption despite their actual levels of interest," she said.
Nonetheless, demand for AI tools means that "vendor investment is a necessary gamble," McMullen said.
In 2023, Workday cut its staff by 3%, but it also said, at that time, that the cut was due to a realignment.
Patrick Thibodeau is an editor at large for Informa TechTarget who covers HCM and ERP technologies. He's worked for more than two decades as an enterprise IT reporter.
