By
Chimamanda U. Martha
March 11th, 2024
After the pandemic, individuals and businesses still rely on Zoom, but the uncertainty of the global economy leads to tough measures. Zoom will not only lay off employees but also decrease salaries for the executive team.
Another tech company has announced a cut in headcount as a result of uncertain economic conditions. The company that joined the list is Zoom Video Communications (NASDAQ: ZM), a leading enterprise video communications provider. Zoom will lay off as many as 1,300 employees, or 15% of its total workforce.
Zoom and Its Plans to Lay Off Staff
According to the blog post released by Zoom CEO Eric S. Yuan, taking such a decision has been tough. It has been driven by the uncertainty of the global economy and its effect on Zoom customers. Eric S. Yuan has also admitted that during the pandemic, the company saw rapid growth, and it tripled the scale of its business. At that time, it was necessary to get more people on board, however, the executives didn’t take time to thoroughly analyze Zoom teams or assess if the company was growing sustainably, toward the highest priorities. As Eric S. Yuan said, that was a mistake.
Now, after the pandemic, individuals and businesses still rely on Zoom, but the uncertainty of the global economy leads to tough measures. Zoom will not only lay off employees but also decrease salaries for the executive team.
Eric S. Yuan stated:
“As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today– and I want to show accountability not just in words but in my own actions. To that end, I am reducing my salary for the coming fiscal year by 98% and foregoing my FY23 corporate bonus. Members of my executive leadership team will reduce their base salaries by 20% for the coming fiscal year while also forfeiting their FY23 corporate bonuses.”
Those who have to leave the company will have support, which includes up to 16 weeks’ salary and healthcare coverage, as well as payment of the FY’23 annual bonus based on the company’s performance.
Following the announcement, Zoom stock lost 0.09% in after-hours trade. Year-to-date, Zoom shares are 43.41% down.
Pandemic Winners Losing Now
Zoom is one of the companies that benefited a lot during the pandemic. Its revenue was skyrocketing due to a spike in business customers who turned to remote work. E-commerce giants Amazon.com Inc (NYSE: AMZN) and Shopify Inc (NYSE: SHOP) also benefited from people forced to stay at home. But now, all those who won tremendous revenue during the pandemic are struggling now, many of them laying off employees to cut costs.
More than 66,000 workers in US-based tech companies have been laid off in mass job cuts so far in 2023. That number includes PayPal’s 2,000-person cut, Google’s 12,000-employee cut, eBay’s 500-person layoff, Dell’s 5% cut in workforce, and more.
Most of the companies going through massive layoffs now are citing economic uncertainty and fears of a recession.