Economic challenges & reduced spending leads to more layoffs

The digital-payment portal PayPal, cloud-backed NetApp, AI lending company Upstart Holdings lay off employees to tackle the difficult economic situations.

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PayPal revealed that it is cutting 2,000 full-time positions globally, which makes up about 7% of its workforce. The digital payments company has said due to the ‘difficult economic situation and the upcoming recession’, they are planning to cut their workforce. 

As reported by IANS, the cuts will take place in the upcoming weeks, with some divisions affected more than others, according to Dan Schulman, CEO and President, PayPal.

In a message sent to PayPal employees on Tuesday, Schulman stated that the company will handle the departing employees with dignity and care, offering them ample severance packages, conducting required consultations, and aiding them with their job transitions. He added that despite the company making significant progress in streamlining its expenses and focusing on key strategic goals, there was still more work to be done.

PayPal was established in 2000 through the merger of X.com, co-founded by Elon Musk in 1999, and Confinity. In 2002, eBay purchased PayPal for 1.5 billion dollars.

NetApp, a cloud software company led by George Kurian of Indian descent, announced that it is cutting 8 per cent of its worldwide workforce. The decision comes as a counter-measure to tackle ‘macroeconomic difficulties and decreased spending climate’ in the market.

The company stated in a document filed with the SEC that it will restructure and decrease its workforce as part of its plan to redirect resources and focus investment on its most promising opportunities, given the persistent macroeconomic difficulties and diminished spending environment affecting the company.

As per IANS, the company has a global workforce of around 12,000, so the job losses are expected to affect approximately 960 employees.

With a strong presence in India, the company anticipates incurring total charges of approximately 85 to 95 million dollars, primarily for employee severance and benefits linked to the restructuring.

Upstart Holdings, an AI lending company, has announced that it will cut  20 per cent of its workforce, which will round off to 365 employees, as part of its cost-cutting initiative called ‘the January 2023 Plan.’ 

This move is a response to the challenging economic environment where many lenders and credit investors have reduced loan originations. The cuts aim to lower operating costs, improve operations, and return the company to profitability.

The company has been facing difficulties as of late, posting a loss of $58.1 million from operations in its third quarter, compared to a net income of $28.6 million the previous year. 

Upstart expects to incur approximately $15 million in charges related to the January 2023 Plan, including severance payments, employee benefits, and taxes, and to save around $3 million in non-cash savings from stock award reversals. 

The majority of these charges and cash expenditures are expected to be processed or completed by the end of the quarter ending March 31, 2023.

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