Rackspace announced in a regulatory filing that approximately 10% of the company’s workforce, mostly in the U.S., is expected to be laid off. 85% of these roles are to be replaced by the company’s offshore service centers. The impacted employees are already notified and slated to leave the company over the next 12 months.
$70 to $80 million restructuring plan
According to the company’s announcement, the restructuring plan is expected to result in between $70 million to $80 million in expenses over the next 1 to 2 years. It includes termination benefits for the affected employees, including severance payments, healthcare benefits, and other costs, with other one-time offshore build-out costs, asset write-offs, professional fees, and expected investments related expenses.
The company aims to generate between $95 million to $100 million in annual savings. Rackspace is also hiring new professionals to accelerate the business. The company currently has more than 700 open roles around the globe. Rackspace aims to reshape its resources to invest in the fast-growing product and services offerings, including cloud services focused on such initiatives as cloud migration, elastic engineering, cloud-native application development, artificial intelligence, machine learning, and security services.