Troubled WeWork said to cut 500 tech jobs
The company was forced to abandon a public offering which was followed by the ouster of its chief executive Adam Neumann
Shared office space giant WeWork is planning to trim nearly 500 employees, or a third of its workforce, from its technology division, as the company aims to cut costs, according to a media report.
This week, the company is also locked in negotiations with Softbank over a new $1 billion (Dh3.67bn) investment to enable it to go through a major restructuring after abandoning the IPO which reduced the company’s valuation drastically. New York-headquartered WeWork, which has more than 13,500 workforce, is also planning to lay off 1,500 to 2000 more employees in phases and talks are under discussion.
“About 350 of the job cuts would come from layoffs in main corporate division, while an additional 150 cuts would come from the sale of companies such as Teem and SpaceIQ that WeWork has acquired recently,” The Information, a digital media company, reported.
The job losses come after WeWork’s botched initial public offering, which was followed by the removal of its co-founder and chief executive, Adam Neumann. The move to slim down the tech division, where employee salaries and stock allocation tend to be higher, “will generate more savings as the company quickly tries to show it can trim spending”, the portal said.
Among the company’s investors is Japan’s SoftBank VisionFund, headed by SoftBank founder and chief executive Masayoshi Son. Mr Son publicly backed WeWork in an interview with Nikkei Business this week, saying in 10 years the company would be “making substantial profits”.
“Other divisions likely to be hit include marketing, real estate, recruiting and design,” the portal added.
Founded in 2010, WeWork offers diverse options of private offices and desks, with varying prices depending on the markets. For example, a desk in Mumbai can be rented for $150 (Dh550), but the same will not cost at least $400 in London.
Aside from corporate governance issues, the citicism the company faced was that it was taking on property for long-term leases but signing people up on a short-term basis, which left it vulnerable.
The shared office space market is picking up globally. Nearly 1,688 new co-working spaces will be opened worldwide in 2019, a little less than half in the US, according to a report by Coworking Resources. While that is 500 less than the last year, the number of co-working spaces will grow more than 40 per cent in next three years and reach 25,968 globally, it added.
Updated: October 9, 2019 05:17 PM