After taking control of the office space sharing firm WeWork by the Japanese investment conglomerate SoftBank, the US firm has said that about 2,400 employees of the company would be laid off globally as a part of its larger strategy of reducing costs and embarking on a path to achieve profitability after the failed IPO launch attempt in September, the company said.
“As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organization,” a WeWork spokesperson in a statement provided to the media. “The process began weeks ago in regions around the world and continued this week in the U.S.”
“This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition. These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade,” the company added.
The total number of persons to be laid off as announced by the company does not include about 1000 cleaners and building maintenance workers. The company has already told these staff that their jobs would be outsourced and hence were offered the chance to take up jobs at the real estate services company JLL which is one of the outsourcing partners of the company or else their services would be terminated form WeWork involuntarily and no severance would be given.
Over the last two months since the failed IPO launch and since the company had been virtually taken over by SoftBank, the sword of job losses had been hanging over the company. In that period, the board of the company forced the ouster of WeWork’s cofounder and CEO Adam Neumann and conceded to the bailout offer from SoftBank against handing over majority stake to the Japanese firm. And despite all but running the company into the ground, a massive payout was given to Neumann as part of that deal.
How many people will be laid off was not specified by WeWork’s executive chairman Marcelo Claure in an email sent to staff on Monday. He however said in the mail that “the necessary job eliminations” will “start in earnest this week in the U.S.”
As of yet, no number on the people to be laid off has been put by the company. WeWork could cut 4,000 jobs, if not more, claimed multiple reports published during the week. Many of those positions are part of its core coworking business, reported the New York Times.
While the company and the market was abuzz with the prospect of the layoffs, WeWork leadership had been trying to reduce concerns of the staff by saying that the company’s priority will be to treat those whose jobs would be laid off with “dignity and respect”, according to an email from Claure that was circulated company-wide.
However since the revelation of the layoffs and the treatment, many are saying that this incident highlights the risks of working for a high-flying tech startup.
(Adapted from CNN.com)