Zoom Video Communications is trimming its workforce by 15% according to a blog post shared by its Chief Executive Officer Eric Yuan earlier today.
The tally of soon-to-be-departed workers amounts to 1,300 people. The head of the tech company stated that Zoom multiplied its headcount by three times in the past 24 months to keep up with the demand the business was experiencing during and shortly after the pandemic.
However, as people have gone back to the offices progressively and the world resumes its normal pace, Zoom’s customer base has been growing at a much slower pace compared to a couple of years ago.
In addition to this decision, Yuan has opted to reduce his salary by 98% for the coming fiscal year and forego his corporate bonus for the full year 2023. Other members of the executive team have also taken 20% cuts in their base salaries and have forfeited their corporate bonuses as well.
The benefits to those that are being let go include up to 16 weeks of salary and health care coverage, payment of their full-year 2023 annual bonus based on how the company performs financially, stock-option vesting for 6 more months, and job placement services.
Most Pandemic Hires Will Probably Be Affected by These Layoffs
By the end of October 2022, Zoom (ZM) had 8,422 full-time employees, meaning that the company hired over 2,000 employees in the previous 12 months according to its quarterly reports. Many of these employees are probably being affected by today’s actions.
A large number of tech companies including Zoom aggressively increased their headcount during the pandemic and are now preparing themselves for an economic slowdown caused primarily by the hawkish measures taken by central banks to reduce inflation.
These measures also dramatically affected the value of Zoom stock, which is now down 86% from its October 2020 all-time high of $590 per share. Investors have also been questioning the company’s capacity to keep growing its business after the pandemic first due to increased competition from top rivals and as thousands of workers are going back to the office.
Zoom comes to join the growing chorus of tech enterprises that are reducing their headcount by 10% or more. This list of corporations includes Microsoft (MSFT), Meta Platforms (META), Amazon (AMZN), Alphabet (GOOG), and Dell Technologies (DELL), among others.
Zoom Still Dominates the Global Video Conferencing Market
According to a study from the digital marketing website Email Tool Tester, Zoom remains the most popular video conferencing app in more than 80 countries including the most developed economies like the United States, the United Kingdom, Australia, and even Russia.
This same survey suggested that Zoom’s top competitive advantage is that it offers free calls of up to 100 participants that can last as long as 40 minutes. However, Zoom’s dominance of the video conferencing market is continually threatened by apps such as Microsoft Teams and Google Meet – both of which are created by hugely successful corporations with tons of resources.
One particular threat that Zoom may now have to deal with comes from the use of artificial intelligence to create smarter video conferencing software. In April last year, Zoom announced that it was launching a product called IQ for Sales that analyzes sales meetings and provides insights about what went down in the conversation.
In a similar fashion, the company introduced some new services including automatic translations for 12 languages and transcription services for over 30 different ones.
Meanwhile, the company may be expecting increased competition from Microsoft (MSFT) amid its partnership with OpenAI – the company behind the popular AI-powered chatbot ChatGPT.
This collaboration could end up making Teams a more robust competitor if some features that have already been discussed by tech experts are added to the application. Some of these improvements that have already been made by Teams with the help of AI include background noise suppression, brightness and focus filters, and echo cancellation.
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