Big tech companies appear to be laying off employees due to the global economic downturn and the challenges ahead for the sector. Today, PayPal announced that it will lay off about 2,500 people, accounting for about 9% of its total employees. According to Bloomberg, PayPal CEO Alex Chriss said in a letter to employees that the layoffs are necessary to right-size the company and "serve our customers at the necessary speed and drive profitable growth. At the same time, we will continue to invest in areas of the business that we believe can create and accelerate growth. There is not much to celebrate."
Chris, who will take office as CEO in September 2023, is facing increasing competition in the digital payments industry. The growing popularity and market share of competitors such as Apple Pay and Square have put pressure on PayPal's business.
Additionally, margins have narrowed in recent quarters due to rising costs. PayPal stock has fallen more than 20% over the past year as the company cut its financial guidance. Chris also admitted on the earnings call that the company's "cost base and complex structure" had been a drag on the company's growth.
PayPal currently has approximately 30,000 employees worldwide. When the latest round of layoffs is completed, the number of employees will be reduced to approximately 27,000. The layoffs will primarily affect vacant positions and roles that have not yet been filled. PayPal said it will contact affected team members by the end of the week.
Last year, PayPal announced that it would gradually lay off 2,000 employees. Former CEO Dan Schulman assured affected employees that they would receive generous benefits and the support they need to transition.
With this layoff, PayPal also joins the ranks of technology companies such as Microsoft Xbox, Riot Games, Salesforce and Embracer. It was reported yesterday that developer EidosMontreal had laid off 97 people. Shockingly, Microsoft is laying off 1,900 people from Activision-Blizzard, ZeniMax and Xbox.