Rackspace literally decimates workforce: One in ten staffers let go this week
(2021/07/23)
- Reference: 1627070105
- News link: https://www.theregister.co.uk/2021/07/23/rackspace_layoffs_offshoring/
- Source link:
Updated Around 10 per cent of Rackspace staff, predominantly in the US it seems, got an unwelcome email this week informing them they were being let go.
Not that the work they do isn't needed. In an [1]paperwork submitted to the SEC on Wednesday, Rackspace disclosed that 85 per cent of the positions being cut will be backfilled by workers in "offshore service centers." That'll be where wages are lower and labor laws more lax, presumably.
"The rebalance in workforce is a component of a broader strategic review of the Company’s operations that is intended to more effectively align the Company’s resources with its business priorities in high growth areas," Rackspace said.
[2]
"The Company estimates that it will incur expenses of approximately $70m to $80m related to the restructuring plan to be incurred over the next 12-24 months with the majority of expenses incurred in the next 12 months."
[3]
[4]
The cloudy biz also announced a reshuffle in management. COO Subroto Mukerji is being shifted to the role of president, and CFO Amar Maletira will take over most of Mukerji's responsibilities. In other words, the beancounters are ruling the roost.
According to Texas Public Radio, [5]around 700 employees at the firm's headquarters in San Antonio were axed on Thursday.
[6]
A source familiar with the layoffs told The Register there were fewer than 100 cuts in the UK, and people have been let go worldwide. Rackspace employs 7,200 globally, and told the SEC it was dumping approximately one in ten employees, informing them of the changes on July 22.
"As part of an internal realignment from supporting dedicated servers and on-premises and in-datacenter customers to cloud consulting, Rackspace has announced internally that they are eliminating a number of roles in the UK," our tipster told us. "Redundancies are also being made in the US and other countries, but no solid count was given."
[7]Rackspace IPO bags $704m, proceeds used to pay down debts to private equity backer
[8]Rackspace reveals retirement plan behind decision to go public by selling 17% of itself
[9]Rackspace sucks up Datapipe, swallows 29 data centres
[10]Rackspace launches cloud consultancy service while firing staff
Apollo Global Management [11]bought Rackspace in 2016, took it private, and [12]layoffs [13]followed .
Last year Apollo [14]took Rackspace public again, in part to pay off the debt it accumulated buying the cloud management company in the first place. CEO Kevin Jones [15]told investors in May he is pushing for a "higher offshore mix across the company," in the future.
In its latest full-year financial results, [16]released in February, Rackspace banked a net loss of $245.8m in 2020, versus a $102.3m loss in 2019, from sales of $2.7bn, up 11 per cent year-on-year. ®
Updated to add
"We continue to hire for roles that are needed to accelerate our business and serve our customers around the globe," a Rackspace spokesperson told The Regiater . "We currently have more than 700 open roles for top talent in the industry."
Get our [17]Tech Resources
[1] https://www.sec.gov/Archives/edgar/data/1810019/000181001921000124/rxt8k72221.htm
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YPs7-IqNa1iZ0UmOwEjgBQAAAME&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YPs7-IqNa1iZ0UmOwEjgBQAAAME&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.tpr.org/business/2021-07-22/rackspace-cuts-10-of-workforce-in-one-of-largest-employee-shake-ups
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YPs7-IqNa1iZ0UmOwEjgBQAAAME&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2020/08/05/rackspace_ipo_bags_704m/
[8] https://www.theregister.com/2020/07/28/rackspace_ipo_terms/
[9] https://www.theregister.com/2017/09/11/datapipe_goes_into_rackspace/
[10] https://www.theregister.com/2017/04/03/rackspace_launches_cloud_consultancy_service_while_firing_staff/
[11] https://www.theregister.com/2016/08/26/rackspace_finds_its_43bn_sugar_daddy/
[12] https://www.theregister.com/2017/02/08/rackspace_redundancies/
[13] https://www.theregister.com/2017/04/03/rackspace_launches_cloud_consultancy_service_while_firing_staff/
[14] https://www.theregister.com/2020/08/05/rackspace_ipo_bags_704m/
[15] https://www.theregister.com/2021/05/12/rackspace_q1_revenue_up_losses/
[16] https://www.globenewswire.com/en/news-release/2021/02/18/2178505/0/en/Rackspace-Technology-Reports-Fourth-Quarter-and-Full-Year-2020-Results.html
[17] https://whitepapers.theregister.com/
Not that the work they do isn't needed. In an [1]paperwork submitted to the SEC on Wednesday, Rackspace disclosed that 85 per cent of the positions being cut will be backfilled by workers in "offshore service centers." That'll be where wages are lower and labor laws more lax, presumably.
"The rebalance in workforce is a component of a broader strategic review of the Company’s operations that is intended to more effectively align the Company’s resources with its business priorities in high growth areas," Rackspace said.
[2]
"The Company estimates that it will incur expenses of approximately $70m to $80m related to the restructuring plan to be incurred over the next 12-24 months with the majority of expenses incurred in the next 12 months."
[3]
[4]
The cloudy biz also announced a reshuffle in management. COO Subroto Mukerji is being shifted to the role of president, and CFO Amar Maletira will take over most of Mukerji's responsibilities. In other words, the beancounters are ruling the roost.
According to Texas Public Radio, [5]around 700 employees at the firm's headquarters in San Antonio were axed on Thursday.
[6]
A source familiar with the layoffs told The Register there were fewer than 100 cuts in the UK, and people have been let go worldwide. Rackspace employs 7,200 globally, and told the SEC it was dumping approximately one in ten employees, informing them of the changes on July 22.
"As part of an internal realignment from supporting dedicated servers and on-premises and in-datacenter customers to cloud consulting, Rackspace has announced internally that they are eliminating a number of roles in the UK," our tipster told us. "Redundancies are also being made in the US and other countries, but no solid count was given."
[7]Rackspace IPO bags $704m, proceeds used to pay down debts to private equity backer
[8]Rackspace reveals retirement plan behind decision to go public by selling 17% of itself
[9]Rackspace sucks up Datapipe, swallows 29 data centres
[10]Rackspace launches cloud consultancy service while firing staff
Apollo Global Management [11]bought Rackspace in 2016, took it private, and [12]layoffs [13]followed .
Last year Apollo [14]took Rackspace public again, in part to pay off the debt it accumulated buying the cloud management company in the first place. CEO Kevin Jones [15]told investors in May he is pushing for a "higher offshore mix across the company," in the future.
In its latest full-year financial results, [16]released in February, Rackspace banked a net loss of $245.8m in 2020, versus a $102.3m loss in 2019, from sales of $2.7bn, up 11 per cent year-on-year. ®
Updated to add
"We continue to hire for roles that are needed to accelerate our business and serve our customers around the globe," a Rackspace spokesperson told The Regiater . "We currently have more than 700 open roles for top talent in the industry."
Get our [17]Tech Resources
[1] https://www.sec.gov/Archives/edgar/data/1810019/000181001921000124/rxt8k72221.htm
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YPs7-IqNa1iZ0UmOwEjgBQAAAME&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YPs7-IqNa1iZ0UmOwEjgBQAAAME&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YPs7-IqNa1iZ0UmOwEjgBQAAAME&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.tpr.org/business/2021-07-22/rackspace-cuts-10-of-workforce-in-one-of-largest-employee-shake-ups
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YPs7-IqNa1iZ0UmOwEjgBQAAAME&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2020/08/05/rackspace_ipo_bags_704m/
[8] https://www.theregister.com/2020/07/28/rackspace_ipo_terms/
[9] https://www.theregister.com/2017/09/11/datapipe_goes_into_rackspace/
[10] https://www.theregister.com/2017/04/03/rackspace_launches_cloud_consultancy_service_while_firing_staff/
[11] https://www.theregister.com/2016/08/26/rackspace_finds_its_43bn_sugar_daddy/
[12] https://www.theregister.com/2017/02/08/rackspace_redundancies/
[13] https://www.theregister.com/2017/04/03/rackspace_launches_cloud_consultancy_service_while_firing_staff/
[14] https://www.theregister.com/2020/08/05/rackspace_ipo_bags_704m/
[15] https://www.theregister.com/2021/05/12/rackspace_q1_revenue_up_losses/
[16] https://www.globenewswire.com/en/news-release/2021/02/18/2178505/0/en/Rackspace-Technology-Reports-Fourth-Quarter-and-Full-Year-2020-Results.html
[17] https://whitepapers.theregister.com/
rcxb1
Not only does dumping 10% of your workforce signal financial straits... having a technology company doing it RIGHT NOW, when tech companies everywhere are turning record profits, reeks of a massive business failure.
Leveraged buyouts should be illegal
Gene Cash
"Last year Apollo took Rackspace public again, in part to pay off the debt it accumulated buying the cloud management company in the first place."
This is the same shit that killed Sears, which was a premier American merchandiser with over a hundred years of success behind it.
There used to be a Sears in every US city, and Craftsman tools, Kenmore appliances, etc were all top quality and highly respected. When you walked in, you got professional courtesy and treatment, instead of Walmart's snotty disgusted acknowledgement that you exist.
And now it's all dead.
Leveraged buyouts should be illegal.
beginning of the end
revilo
What signal does this send to the remaining talent? Run away from such douche bags (especially if they ask the leaving staff to train the cheaper new folks).
Unfortunately, the management which does such decisions gets rewarded due to short term profit increase. They themselves have no problem, as they can
infest a new company with their short sighted decisions.
If you're dumping 1/10th of your workforce, it seems that either you were pretty overstaffed, or you are staffed properly, but are circling the drain and are desperately trying to buy time. Either scenario should call for heads to roll at the corner offices.
Alternatively, you're trying to make some quick "savings" by offshoring. That's a move that doesn't seem to pan out in the long term (but juices the profits short-tern)
Glad I'm not still at $lastjob. We hosted at Rackspace. I'd be starting the search for a new vendor in anticipation of things turning sour.