WeWork on Thursday said that it will start the layoff procedure of 2,400 employees globally. The decision comes in a bid to restructure the company and cut costs for the future after a disastrous IPO attempt.
The layoffs will be across all departments of the company and will even affect its human resources, growth and corporate technology departments. However, it won't affect 1,000 odd building maintenance staff and cleaners. Instead, their jobs will be outsourced.
The layoffs are part of Japanese investment company SoftBank Group's plans of downsizing the workforce at WeWork in a move to bail out the company from the present crisis and get back to profits.
Decision part of bailout plan
SoftBank Group is the largest investor in WeWork. In October, SoftBank said that it would buy 80% of WeWork for a $9.5 billion bailout package to help the company get back on its feet.
The company in a statement said, "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."
Struggle continues for WeWork
WeWork has been suffering for quite a while now. The layoffs were long rumored and have finally started taking shape and if earlier reports are to be believed, the company might fire almost one-third of its total workforce that comes to 5,000.
As of June 30, the office-sharing company had 12,500 employees and another round of layoff in the future could reduce its workforce by almost 50%. Anticipating layoff, employees earlier this week had said that they were planning to unionize by this month. However, the layoffs have taken effect before that
Corporate mismanagement leads to downfall
WeWork deviated from its core business in recent times and branched into gyms, co-living buildings and even school in recent times. This compelled the company to hire more workers thus ballooning its operating costs. The layoffs were looming large on the company for the past couple of months since it decided to postpone it planned IPO. Since then the company has been under public scrutiny raising questions on its business plan.
The failed IPO culminated into the ouster of its co-founder and CEO Adam Neumann. At one point of the year WeWork was valued at $47 billion but that was also the beginning of the tough days that the company is facing now.