Zendesk to lay off another 8% of its staff, cites macroeconomic issues

CRM software provider Zendesk is reducing its workforce by another 8%, citing macroeconomic uncertainty, just six months after the company laid off 300 staffers for the same reason.

“All this is difficult news to share, but I’ve made the decision to reduce our workforce by 8% at Zendesk,” CEO Tom Eggemeier wrote in an email to all employees, which was later posted as a blog.

The new tranche of layoffs, according to Eggemeier, can be attributed to continued macroeconomic uncertainty and increased competition from rivals.

“When I joined at the end of November, I’d hoped a combination of improving macroeconomic conditions and streamlining costs would help us avoid this moment. Unfortunately, macroeconomic conditions have not improved and we find ourselves in an increasingly competitive marketplace,” Eggemeier wrote.

In November, Zendesk laid off around 300 staffers from its global workforce of 5,450 employees to reduce operating expenses because the company hired more employees than were commensurate with its growth projections.

“From 2020 – 2022, our hiring outpaced our business realities,” Eggemeier, who joined the company in November last year, wrote. Zendesk’s executive team had taken responsibility for the first round of layoffs that came months after it was acquired by a consortium of private equity firms for $10.2 billion.

Eggemeier also pointed out that Zendesk’s enterprise customers were considering adopting newer technologies such as generative AI and said Zendesk would tune its employee structure to help customers meet their desired goals.

“Looking ahead, I believe we have an incredible opportunity to lead the new era of intelligent CX. The new solutions we introduced at Relate — Zendesk AI and Conversational Commerce — will help our customers transform the way they do business,” Eggemeier wrote.

The severance package for affected employees would include three months of base salary, a prorated portion of an annual bonus, health insurance benefits, and immigration support among other things, the CEO wrote.

Several technology companies such as Amazon, Meta, and Microsoft have held multiple rounds of layoffs since October last year due to tepid demand arising out of macroeconomic uncertainty and global phenomenon such as the Russia-Ukraine war.

These layoffs have continued in 2023 with more staffers being laid off than the previous year. According to data compiled by Layoffs.fyi, the online tracker keeping tabs on job losses in the technology sector, 726 tech companies have laid off about 200,846 staff so far this year, compared to 164,709 layoffs last year.