Zoom lays off 15% of its workforce, cuts executive salaries

Zoom laid off 15% of its workforce, or 1,300 workers, and cut the salary of CEO Eric Yuan by 98% on Tuesday as the company grapples with falling demand for its services. The layoffs are the latest in an economic downturn that has led to thousands of job cuts across the tech industry.

Yuan notified employees of the job cuts in a letter sent a half-hour before affected U.S. workers received an email explaining the procedure for leaving the company and their severance packages. The company said it will handle the layoffs of non-U.S. employees according to local laws.

I know this is a difficult message to hear, and certainly not one I ever wanted to deliver.

"I know this is a difficult message to hear, and certainly not one I ever wanted to deliver," Yuan wrote. "For those Zoomies waking up to this news or reading this after normal work hours, I am sorry you are finding out this way but we felt it was best to notify all impacted Zoomies as soon as possible."

The cutbacks were necessary to bring Zoom's costs in line with a decline in demand for its video conferencing services, Yuan said. During the pandemic in 2020 and 2021, the company grew three times in size to meet the need for its products as organizations held virtual meetings with workers and customers.

Today, economic uncertainty due to high inflation, rising interest rates, a shrinking U.S. economy and the war in Ukraine has led to companies reducing expenses.

"The uncertainty of the global economy, and its effect on our customers, means we need to take a hard -- yet important -- look inward to reset ourselves so we can weather the economic environment, deliver for our customers and achieve Zoom's long-term vision," Yuan said.

Zoom laid off workers across the organization based on "critical priorities for long-term growth," he said. The company also targeted areas that had become "overly complex or duplicative."

Along with the layoffs, Zoom reduced Yuan's salary by 98% in the coming fiscal year and the wages of the executive team by 20%. Yuan and the executives also forfeited their corporate bonuses.

Departing workers will receive up to 16 weeks of salary and healthcare coverage. The company will pay workers' fiscal year 2023 annual bonuses and provide outplacement services.

Zoom's cutbacks were not a surprise to some analysts. Since January, some of the biggest names in the tech industry have reduced their workforce by thousands of employees. They include Amazon, Google parent Alphabet, Meta, Microsoft and Salesforce.

"They're all retrenching and laying off workers," said Blair Pleasant, principal analyst at COMMfusion. "It's also partly to improve profitability because that's what Wall Street is looking for."

Zoom stock was up more than 8% on Tuesday.

Antone Gonsalves is the networking news director for TechTarget Editorial. Since the mid-1990s, he has worked for UBM's InformationWeek, TechWeb and Computer Reseller News. Have a news tip? Please drop him an email.

Mary Reines joined TechTarget Editorial in October 2022 as a news writer covering networking. Prior to TechTarget, Reines worked for five years as arts editor at the Marblehead Reporter, her hometown newspaper.