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WeWork is set to layoff 2,400 workers and an extra 1,000 are expected down the line as the company sells its businesses and outsources some kinds of works.
In what seems like an end to a disappointing year for troubled startup WeWork the company recently announced its intention to lay off 2,400 workers from the company following near collapse. The once-famed startup announced this on Thursday. The layoffs amount to roughly 20% of its 12,500 strong workforces. Some more layoffs of over 1,000 people are expected as several business units of the company are going to be shut down, merged or sold off as the company refocuses and resets several aspects of its business model due to the new stringent measures that have been introduced to ensure its survival.
A further 1,000 maintenance workers are also expected to be transferred to outsourcing agencies in order to lower the human resource running costs. WeWork responded in a statement and said:
“The company is making necessary layoffs to create a more efficient organization.”
From being one of the most promising startups and having one of the most promising IPOs this year, WeWork has become a pariah and no one wants to even consider an investment in the failing firm that has been saved by bare inches from collapse by Softbank.
Initially valued at $40 billion, WeWork has been valued at less than 10% of its original value. This follows extremely quick expansion, improper corporate practices by the former CEO Adam Neumann, improper valuations of the company, withdrawal of its IPO, the exit of Adam Neumann and the bailout of the company by Softbank.
The layoffs are currently occurring under the tenure of the new Chairman Marcelo Claure who is also a Senior Executive at Softbank as well. Softbank, of course, is the biggest investor in the ailing company and the largest shareholder at the same time and it has been doing everything possible to reverse the trend of losses that WeWork has been going through.
Already, there are signs that the bailout deal that Softbank cut with the management isn’t quite cutting it as no one knows how bad things are on WeWork’s balance sheet.
Already, the exit deal provided to Mr. Nuemann has already generated a lot of anger among employees who had already indicated this in a letter to the new management. Many of them already held shares in the organization and now that there won’t be an IPO the hopes of high returns on investments won’t hold sway anymore.
From next month all cleaning and facilitation jobs would be transferred to JLL which is a real estate servicing firm or one of its associate companies. WeWork had already informed its cleaning and facilities workers that anyone who wanted to retain his or her job will have to transfer to the other company and retain all salaries and benefits however those who don’t will lose their employment sources reveal.
“These are incredibly talented professionals, and we are grateful for the important roles they have played in building WeWork over the last decade,” indicated WeWork in the statement.