Rackspace has confirmed companywide layoffs, including 200 staff cuts at the managed cloud service provider's headquarters and 6 percent staff cuts across the United States. CEO Taylor Rhodes confirmed the layoffs in a blog post today. International Rackspace job cuts also are coming.
In a blog, he confirmed:
- Rackspace today initiated layoffs that will cut our U.S. workforce by about 6 percent.
- The company is proposing somewhat smaller reductions in offices in other countries, through consultative processes governed by local laws.
"The U.S. layoffs and proposed international reductions are personally painful, but they are necessary and manageable," he added. "We’re confident we can accomplish these reductions without any effect on the expertise and exceptional customer service we provide to our customers. We have targeted these cuts primarily toward our corporate administrative expenses and management layers, while striving to create the least impact to our frontline Fanatical Support and product teams."
The Rackspace layoffs essentially end a honeymoon period for the managed cloud provider, which Apollo acquired in mid-2016 for $4.3 billion. After attempting to compete head-on against Amazon Web Services and Microsoft Azure, the company pivoted more than a year ago -- introducing managed services for third-party clouds. Rackspace also sold off some assets.
The AWS and Azure businesses are growing fast for Rackspace -- but apparently not fast enough to offset weakness elsewhere in the company's business. Rhodes noted:
"Our U.S. layoffs are focused mainly in areas where our workforce has grown more rapidly than our revenue. Other parts of our business — such as our Rackspace Managed Security offering, our OpenStack and VMware private clouds, and our managed services for Amazon Web Services and Microsoft Azure — are growing rapidly, at annualized rates in the high double digits."
Rhodes didn't specifically mention the slower-growth businesses by name.