WeWork said on Thursday it will be slashing the job of around 2,400 employees, almost 20 percent of its workforce.
The office-sharing company, a part of the SoftBank, aims to cut costs. The job cut is the biggest move yet by Japanese technology conglomerate SoftBank Group Corp, which is providing a $9.5 billion lifeline and will soon own about 80 percent of WeWork’s shares, to refocus the company on its core business, Reuters reported.
Under co-founder and ex-CEO Adam Neumann, WeWork had become bloated and was diversifying into all kinds of areas – including setting up a school and running apartment buildings – without any clear route to profitability.
“As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organization,” a company spokeswoman said in a statement.
The job cuts are the latest sign of how much WeWork’s prospects have deteriorated – from being worth $47 billion in January and planning in September an initial public offering (IPO), to a company facing a cash crunch and fighting for survival.
WeWork shelved plans for the IPO on September 30, a week after Neumann resigned as CEO.
The layoffs began weeks ago overseas and continued this week in the United States, WeWork 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,” New York-based WeWork added.
WeWork had 12,500 employees on June 30, and there are others who work for affiliates.
The layoffs come even as WeWork considers a change in CEO to replace current Co-CEOs Artie Minson and Sebastian Gunningham, who themselves have only been in place since September.
The groups affected by the layoffs include WeWork’s architecture unit, which has helped curate WeWork’s distinctive shared office spaces known for their modern design, and its technology department, among which are coding and software teams, according to people familiar with the matter.
Job losses in the technology department further undercut WeWork’s central claim that it is primarily a technology company, not just a real estate firm, and therefore merits a much higher valuation.