CA Technologies plans to cut 800 employees in some areas and hire 500 to 600 people in other areas as the software company accelerates its shift to subscription services, agile development and centralized teams, CEO Michael Gregoire told Wall Street analysts during an earnings call yesterday.
Amid the changes, CA expects to incur a pre-tax charge of between approximately $140 million and $160 million in fiscal 2019, the company indicated.
CA’s revenue hit $1.083 billion in fiscal Q4 2018, up 7 percent from the corresponding quarter the previous year. Predictably, the company wants to accelerate its shift from on-premises sales to SaaS subscriptions, though traditional licensed offerings will still be available for customers who prefer that model.
Those moves are particularly timely. CA, in addition to facing traditional rivals like BMC, must also compete against “cloud scale” monitoring and management companies that focus on application performance monitoring (APM), infrastructure, web and mobile monitoring. The key players have grown to include Cisco Systems AppDynamics, Datadog, Dynatrace, New Relic and SolarWinds among others.
Fewer Offices, Centralized Staff, Agile Development
CA’s growing focus on agile software development means “you need to be in the office, you need to be collaborating with each other,”Gregoire said during the earnings call. “And we’re taking a lot of our smaller satellite offices and reducing those footprints on a global basis and trying to get large groups of employees into bigger locations that are strategic. So, that hits the real estate side of the house.”
On the talent front, CA is planning about 800 staff cuts this fiscal year, “but we’re also going to be hiring somewhere between 500 to 600 people over the next year as well that will have different skills and more strategic geographic locations,” Gregoire said. “All of this is to drive growth and focus on our newer products and be able to ensure that we have the technical sales and the technical abilities to build these products.”
A big piece of the head count reductions will involve the services and sales areas, according to CFO Kieran McGrath. The company will also strive to cut G&A (general and administrative) spending, and then “reinvesting really in organic R&D in the fastest parts of our portfolio and remixing more of our sales resources into a digital sales and marketing model,” McGrath says. “And from that perspective, we would expect that we’re going to be more than doubling actually next year the amount of our digital sales resources.”
CA Technologies Partner, MSP Strategy
CA didn’t specifically tackle the company’s partner or service provider strategy during the earnings call. Nevertheless, the company has strong relationships with midmarket MSPs, many of which are adding managed cloud, infrastructure and application services to their catalogs.
Key partners include InterCloud Systems, which is working with CA on SDN (software defined networking), NFV (network functions virtualization) and SD-WAN management opportunities.
The company’s flagship conference, CA World 2018, is scheduled for November in Florida. The event typically attracts global 2000 executives, IT professionals and several hundred MSPs.