WeWork, the nine-years-old coworking space, said on Thursday that it’s laying off 2,400 employees or 20% of its workforce. The slashing of employees is no surprise to the tech industry as it has already recorded huge losses that have almost stumbled them on the verge of bankruptcy.
Well, thanks to Softbank, a tech investor, for offering $9.5 billion in exchange for taking over the company. While JP Morgan Chase, the leading underwriter for WeWork’s IPO, had also placed a $5 billion bailout package in the form of debts; however, the board of directors chose Softbank over them.
Following the rescue, SoftBank was reported to borrow $2.8 Billion from the leading Japanese banks. While the Japanese conglomerate has billions of dollars in its yard, it tends to maintain certain reserves and hence, it is seeking out a loan.
“The company is making necessary layoffs to create a more efficient organization,” WeWork representative said in a statement. Over the course of a year, WeWork ousted its founder Adam Neumann from CEO position, aborted its IPO, and expanded its presence and subsidiaries frantically.
Earlier, many employees expressed anger in the form of a letter, when they learned that its founder is receiving $1 billion as an exit package. “We don’t want to be defined by the scandals, the corruption, and the greed exhibited by the company’s leadership,” employees said.
Over the layoffs, WeWork also said that “These are incredibly talented professionals, and we are grateful for the important roles they have played in building WeWork over the last decade”. It also says that every employee will receive severance packages and other forms of “assistance to aid in their career transition.”
WeWork is expected to sell its other non-core business and layoff more 1,000 employees, NewYork Times reported. It is also said that it will be outsourcing employees for cleaning and facilities jobs from JLL, a real estate service company.