WeWork, an American commercial real estate company that provides shared workspaces, reportedly said on November 21 that it will be laying off over 2,400 employees as it struggles to reorganise. A WeWork spokesperson told an international media outlet that the cuts were being made as part of the company's efforts to create a more efficient organization and to refocus on the core office sharing business. The layoffs are reportedly the biggest move by the Japanese Technology conglomerate SoftBank Group Corp, which will soon own about 80 per cent of WeWork's shares.
The layoffs come amid mounting losses that the company has been facing. The forthcoming job cuts had been circulating for weeks. Last month the company also lost almost $1.3 million in the third quarter which was reportedly more than twice the losses recorded in the same period a year earlier. The WeWork spokesperson has reportedly confirmed that the 2,400 employees who will be laid off, however, will receive severance, continued benefits, and other forms of assistance to aid in their career transition. According to an international media outlet, the groups affected by the layoffs include the company's architecture unit and its technology department.
Earlier, in the month of September, the company also scrapped its plans for an initial public offering (IPO) which forced out chief executive Adam Neumann, whose leadership became a major source of worry for investors. It was in October that SoftBank announced that it would buy 80 per cent of the struggling company. According to reports, with SoftBank as the new owner, the company is expected to make sweeping changes to its business, including divesting noncore businesses and focusing on enterprise customers, instead of small and mid-sized clients.
WeWork is further also planning to close or sell its peripheral businesses including its private elementary school after the current school year. Alex Cohen, the vice president of the company reportedly said that WeWork's payroll became bloated as it tried to keep services in house rather than outsourcing them. He further added that the company did not have time or appropriate management to put in place the processes and organisational structures to enable their staff to efficiently service the business's relentless appetite for new locations.