Workday Cuts 8.5% of Workforce to Focus on AI Investments

Workday is streamlining its operations with a workforce reduction of approximately 1,750 positions, representing 8.5% of its employees. The restructuring, outlined in a memo by CEO Carl Eschenbach, is driven by the company's ongoing growth strategy and increasing investment in artificial intelligence (AI).

"As we embark on our new fiscal year, we are at a critical juncture," Eschenbach stated. "The demand for AI holds immense potential to fuel a new era of growth for Workday."

The majority of affected employees will be notified today, and the company expects to incur charges between $230 million and $270 million related to severance payments and other costs. Laid-off US employees will receive a minimum of 12 weeks' pay, with additional compensation based on tenure.

While Workday anticipates exiting certain office spaces, it remains committed to expanding its global presence through investments in strategic locations. The restructuring will allow the company to continue hiring in select areas and roles over the next year.

This workforce reduction follows a trend of layoffs in the tech sector, as companies navigate changing consumer spending patterns and bolster their AI capabilities. Workday's earnings results for fiscal 2025 are scheduled to be released later this month.

In its most recent quarterly report, Workday reported a net income of $193 million on revenue of $2.16 billion, both increases compared to the previous period. Shares of Workday rose over 2.5% in midday trading on Wednesday.