Via a blog post by CEO Taylor Rhodes, Texas-based cloud computing company Rackspace announced that it is cutting about 6% of its workforce in areas that have seen slowed growth in recent years.
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Rhodes says the cuts will primarily be focused on the company’s corporate administrative expenses and management, and that the company’s “front-line” support staff and product teams will be least impacted by the layoffs. Rackspace did not provide additional details about where the cuts will come from or the specific number of employees that would be impacted, saying only they are in areas “where the workforce has grown more rapidly than the revenue.”
In September 2016, Rackspace reported that it had 6,115 workers. Six percent of that would be about 366 employees.
Fast-growing sectors of the company’s business – notably its Managed Security, Hosted OpenStack and VMware clouds, and Managed Amazon Web Services and Microsoft Azure public cloud products – will not be cut.
“We will continue to invest and build our capabilities in these fast-growing lines of business. We have big ambitions, because the complexity and speed of change our customers are facing as they move into the multi-cloud world have never been higher,” Rhodes wrote in a blog post announcing the layoffs. He called the cuts “painful, necessary and manageable.”
The cuts come about three months after Rackspace officially went private. Apollo Global Management announced plans to buy Rackspace in August 2016 for $4.3 billion. That announcement capped off a multi-year period when rumors about the company’s potential sale swirled.
Rackspace was founded in 1998 as a managed hosting company, but has progressed to offer its own IaaS public cloud based on OpenStack, to now helping customers use public IaaS cloud platforms. For more about Rackspace’s future strategy, check out an in-depth interview with Rhodes here.