Workday Cuts 1,750 Jobs Amid AI Push and Economic Challenges

PLEASANTON, Calif. — Workday, a leading human capital management firm, announced Wednesday it will cut approximately 1,750 jobs, or 8.5% of its workforce, as part of a strategic shift toward artificial intelligence investments amid a challenging economic climate. The company’s shares rose over 4% in premarket trading following the announcement.

CEO Carl Eschenbach stated the layoffs are necessary to reallocate resources toward AI development and expand the company’s global footprint. “The environment we’re operating in today demands a new approach, particularly given our size and scale,” Eschenbach said in a note to employees.

The job cuts come as the human capital management industry faces slower spending from enterprise clients, driven by high interest rates and tighter tech budgets. Workday expects to incur $230 million to $270 million in charges related to the cost reduction plan, with $60 million to $70 million recognized in the fourth quarter of fiscal 2024.

As of Jan. 31, 2023, Workday employed approximately 18,800 people. The company also plans to close certain office spaces as part of its cost-cutting measures, with actions expected to be completed by the second quarter of fiscal 2026.

Workday faces intense competition in a crowded market, with rivals like Paychex and Automatic Data Processing making strategic acquisitions to consolidate their positions. Last month, Paychex announced a $4.1 billion cash deal, while ADP acquired WorkForce Software for an undisclosed amount in October.

Despite the layoffs, Workday remains optimistic about its financial performance. The company expects its fiscal fourth-quarter and full-year results to meet or exceed prior forecasts. In November, Workday projected annual subscription revenue of $7.70 billion, with fourth-quarter subscription revenue estimated at $2.03 billion, aligning with analyst expectations, according to LSEG data.

The announcement reflects broader trends in the tech sector, where companies are increasingly prioritizing AI and automation to navigate economic uncertainty and streamline operations.