On Monday, LinkedIn, a company owned by Microsoft, announced a workforce reduction of nearly 600 employees. Most of these cuts were concentrated in the engineering division, as indicated in a memo seen by CNBC. Additionally, reductions were also made in the finance and human resources departments, according to an anonymous source with knowledge of the situation, who requested anonymity due to not being authorized to discuss these changes.
These layoffs come as LinkedIn, a professional social network, has experienced a slowdown in year-over-year revenue growth for eight consecutive quarters. In the second quarter, the revenue only increased by 5%, despite continuous growth in membership over the past two years, as reported by Microsoft in July.
Adjusting organizational structures to enhance agility
LinkedIn executives Mohak Shroff and Tomer Cohen articulated in the memo, “As we continue to execute our FY24 plan, we need to also adapt our work methods and priorities to deliver on the key initiatives that will significantly contribute to achieving our business objectives. This involves adjusting our organizational structures to enhance agility and accountability, establishing clear ownership, and promoting efficiency and transparency by reducing layers.”
In January, Microsoft had already announced a workforce reduction of 10,000 employees, with additional cuts occurring in July. These measures are being taken as Microsoft’s overall revenue growth has decelerated, prompting CEO Satya Nadella to implement cost-saving measures throughout the company.
It’s important to note that these latest layoffs are in addition to the 10,000 announced in January, as confirmed by a company spokesperson. Concurrently, LinkedIn is increasing its hiring efforts in India, according to a source familiar with the situation.
LinkedIn Layoffs: Over 600 Employees To Lose Jobs From Microsoft-Owned Company
The decision influenced by changing customer behaviors
In a blog post, LinkedIn expressed its commitment to adapting its organizational structure and decision-making processes while continuing to invest in strategic priorities for the future. They also emphasized their dedication to providing support and respectful treatment to all affected employees during this transitional period. The company is channeling a significant portion of its resources into artificial intelligence. Notably, LinkedIn recently introduced an AI-driven tool to assist recruiters in discovering potential candidates on its platform. Furthermore, in Microsoft’s most recent financial report, LinkedIn revealed that its AI-driven collaborative articles have become the fastest-growing source of traffic on the platform.
In May, LinkedIn had already implemented a reduction of 716 positions and ceased its job application in mainland China. CEO Ryan Roslansky explained that this decision was influenced by changing customer behaviors and a slowdown in revenue growth, as stated in a letter to employees.
Following a wave of extensive layoffs in the technology sector at the end of the previous year, LinkedIn experienced a surge in user numbers and achieved “record engagement” among its 875 million members at the time, as highlighted by Microsoft CEO Satya Nadella during an earnings call in October.
