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January 30, 2024
PayPal joins tech layoff wave with major workforce reduction

PayPal is set to layoff approximately 9% of its workforce, a move announced by CEO Alex Chriss in a recent letter to staff, as per a recent Bloomberg report. This decision comes as the company faces increasing competition, profit pressures, and a series of analyst downgrades. The layoffs, which will affect about 2,500 employees, are part of Chriss’s strategy to streamline the company and enhance its agility and profitability.

Chriss, who took the reins at PayPal in September, emphasized the need to “right-size” the organization through both direct cuts and the elimination of open roles. This restructuring aims to enable PayPal to respond more swiftly to customer needs and foster profitable growth. The company, which had around 29,900 employees at the end of 2022, had previously executed a similar round of layoffs in January of the same year.

PayPal’s shares have seen a significant decline, dropping over 20% in the past year amid faltering earnings and lowered guidance for its full-year adjusted operating margin. The appointment of Chriss as CEO was a response to these challenges, as he replaced former CEO Dan Schulman.

The payments giant, once a pioneer in the industry, now grapples with stiff competition from entities like Apple Inc. and Zelle. This competitive landscape has led to at least four analysts downgrading PayPal’s stock this month, citing concerns ranging from increased rivalry to profitability pressures.

On the third-quarter earnings call, Chriss acknowledged the company’s “cost base and complex structure” as impediments to progress. He has committed to addressing these issues to improve PayPal’s operating leverage. The company, based in San Jose, California, is expected to report its fourth-quarter results in the coming week.

Chriss’s tenure so far has been marked by a reshuffling of leadership roles and a clear intent to streamline operations, which had expanded significantly during the pandemic. This move mirrors actions by other companies in the sector, such as Block Inc., which also announced job cuts as part of its workforce reduction plan.

Layoffs across the industry

The recent layoffs at PayPal are part of a broader trend of workforce reductions across the tech industry. Several major companies, including Google and Microsoft, have also announced significant job cuts, reflecting the challenges faced by the sector in the current economic climate.

Google, one of the tech giants, has recently initiated layoffs affecting hundreds of employees. The decision comes as the company navigates through a period of economic uncertainty and shifting market demands. This move by Google is indicative of the broader industry trend where companies are reassessing their workforce needs in response to changing business environments.

Similarly, Microsoft has announced plans to lay off approximately 1,900 employees, impacting its Xbox and Activision Blizzard divisions. This decision is part of Microsoft’s broader strategy to streamline operations and focus on key growth areas, particularly as the company integrates the newly acquired Activision Blizzard. The layoffs at Microsoft underscore the challenges faced by even the largest players in the tech industry as they adapt to a rapidly evolving market.

The post PayPal joins tech layoff wave with major workforce reduction appeared first on ReadWrite.

 

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