Zenefits will lay off 45% of its employees in an effort to slash costs, according to an internal memo this morning that was obtained by BuzzFeed News, a stark acknowledgment by the embattled human resources startup that its onetime expectations for growth were vastly inflated.
Roughly 430 workers will be cut, including 250 in Zenefits’ San Francisco headquarters and 150 in its office in Tempe, Arizona, leaving the company with about 500 employees, according to the memo and a person briefed on the matter. That’s about a third of the size it was a year ago, when it ousted its founding CEO, Parker Conrad, over revelations that it flouted state regulations for selling health insurance.
Towards the end we get more specifics:
Fulcher said in the memo that Zenefits would consolidate its operations group in its Arizona office, while expanding its product and engineering groups in Vancouver and Bangalore to supplement its San Francisco team.
Outsourcing has become commonplace in many U.S. industries, particularly in technology where countries like India have a much larger, better trained, and most importantly, cheaper workforce.
It will be interesting to see how Trump responds after he praised Intel for their plans to build factory in Arizona. He convinced the company Carrier to keep 1,000 jobs in the U.S. by giving them $7 million in tax breaks, but this sort of approach addresses the symptoms of the outsourcing problem, not the causes.
A few of the causes include valuing profit over people, and having an education system that doesn’t always properly equip kids with the skills they’ll need to be relevant in the workforce.
I’m sure Betsy DeVos has insightful solutions to these problems.