Workday to Cut Nearly 2,000 Workers on Profit FocusWorkday to Cut Nearly 2,000 Workers on Profit Focus

(Bloomberg) — Workday Inc. is cutting about 8.5% of its workforce, making it the latest technology company to begin 2025 with headcount reductions.

The cuts will amount to about 1,750 workers, Chief Executive Officer Carl Eschenbach wrote in a note to employees Wednesday. "The environment we're operating in today demands a new approach, particularly given our size and scale," he wrote.

Workday intends to hire in strategic areas such as AI, allow faster decision-making, and take on more people overseas, Eschenbach wrote. This will advance the company's "ongoing focus on durable growth," Workday said in a filing Wednesday.

Technology companies have grown more accustomed to job reductions after a wave of massive layoffs at the start of 2023. Salesforce Inc., Amazon.com Inc., Microsoft Corp. and Meta Platforms Inc. have this year all moved to trim their corporate workforces.

Shares gained 6.3% to close at $276.17 Wednesday in New York. Workday was one of the few major tech companies which hadn't drastically reduced its headcount in recent years. It had 20,493 employees at the end of October.

"We believe that the shift to AI is going to make every company in software take a hard look at its cost structure in front of the upcoming adoption of agentic AI," wrote Kirk Materne, an analyst at Evercore ISI.

Related:Tech Company Layoffs: The COVID Tech Bubble Bursts

Workday, which makes software for business tasks such as managing personnel, had recently signaled a greater focus on profitability. In August, the company said it would save money through selective hiring and using artificial intelligence in its call centers and finance departments.

Because Workday hadn't yet resorted to job cuts, the reductions announced Wednesday could signal issues with demand recovery or user growth, wrote Anurag Rana, an analyst at Bloomberg Intelligence  

The company will also exit certain owned office space, it wrote in a filing Wednesday. The plans overall will result in between $230 million and $270 million costs, which should be completed by the end of April 2025, it said.