Now Zoom lays off 1,300 employees, 15% of staff

In a now unfortunately familiar story of tech-sector layoffs, Zoom says it should have taken more time to assess whether it was growing sustainably after its pandemic-led growth spurt as it announced plans to cut 1,300 jobs. 

Zoom joins the list of US tech companies to make significant cuts after rapid hiring during the pandemic-driven windfall for the sector. Zoom said it will cut 15% of its global headcount, amounting to 1,300 employees. 

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Zoom and Microsoft Teams user numbers exploded during the first wave of the COVID-19 pandemic as a result of the shift to remote work. Zoom bulked-up on staff to support that growth. Now, some of those recruits have received an email that states “[IMPACTED] Departing Zoom: What You Need to Know.” Google likewise notified axed employees via an email and blogpost. 

“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,” wrote Zoom chief and founder Eric Yuan in a blogpost.  

He went on to explain that the pandemic changed Zoom’s trajectory, but that he was proud of how it “mobilized as a company to keep people connected”. But — in a similar way to how Amazon, Salesforce, and Meta couched their large layoffs — Yuan said Zoom hired aggressively and didn’t do enough to weigh up whether its growth was sustainable.   

“To make this possible, we needed to staff up rapidly to support the quick rise of users on our platform and their evolving needs. Within 24 months, Zoom grew 3x in size to manage this demand while enabling continued innovation,” wrote Yuan. 

“We worked tirelessly and made Zoom better for our customers and users. But we also made mistakes. We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities.”

The cuts are happening across all organizations within Zoom. Yuan said decisions on cuts were based on “critical priorities for long-term growth” and the company cut roles that were “overly complex or duplicative”. 

Yuan said he will reduce his salary for the coming fiscal year by 98% and will forgo his fiscal 2023 corporate bonus. 

Affected US employees will be offered 16 weeks’ salary and healthcare, FY 2023 performance-based bonus pay, stock options, and various outplacement services.

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Zoom, which was founded in 2011, has focused on winning more larger enterprise customers since the pandemic. The company discovered demand for its paid services from small and medium businesses was uneven. In November, it reported FY Q3 2023 revenues of $1.1 billion, of which $614 million came from 209,000 enterprise customers. It will announce FY Q4 2023 and full fiscal-year earnings on Monday, February 27.