Paypal Can’t Afford To Pay Its Workers?
Add Paypal to the rapidly growing list of underperforming companies. After failing to meet goals, Paypal has begun to lay off workers.
This article is more than 2 years old
Another tech company is slashing its workforce. PayPal Holdings Inc started laying off staff from departments like risk management and operations, earlier this week. The move comes as the firm seeks to solidify profits after spending growth on its platform began to stagnate recently. The company let go of dozens of employees who worked in Chicago, Omaha, Nebraska, and Chandler, Arizona, according to Bloomberg.
Speaking about the lay-offs in a statement via MyBroadBand, a spokesman for the money transfer firm said PayPal is constantly evaluating how they work to ensure that they are prepared to meet customers’ needs. The company also strives to ensure that they are operating with the best structure and processes to support its strategic business priorities as they continue to grow and evolve. The outfit previously revealed plans to permanently lay off more than 80 people at its San Jose, California headquarters.
The news isn’t all that surprising since the multinational financial technology giant approved a strategic reduction of its workforce in 2020. The recent layoffs are just par for the course. Additionally, spending on the platform only increased by 15% in the first quarter of this year. It is the smallest growth rate the company has seen in five years, Engadget reports. PayPal also warned in a regulatory filing that it incurred $20 million in costs tied to its restructuring in the first three months of the year.
The strain on product availability due to the global supply chain crisis had a negative impact on PayPal’s finances, as well as people returning to in-store shopping after pandemic restrictions eased. The firm’s former parent company EBay Inc. has also been rapidly moving payments away from the platform. Moreover, the money transfer firm spent $100 million on severance pay and other expenses related to the job cuts. And it expects to spend even more in the coming months. But the company hopes that the current restructuring will save $260 million a year in the long term.
Last month PayPal said it was working to improve operating leverage, or the ability to grow revenue faster than expenses. At the time, Chief Executive Officer Dan Schulman said they had started to simplify its operating model before the pandemic. But the explosion in volumes on its platform in the early days of the outbreak forced the company to put those plans on hold. “We are now coming back to this work with renewed focus, energy, and purpose,” Schulman promised at that time.
PayPal is just one of the many tech companies that have been forced to retrench employees or halt new hires due to the economic slowdown. Microsoft, Meta, and NVIDIA will be limiting their hiring as a result of crashing stock prices, slowed sales, and poor revenue growth. Uber and Lyft are also cutting back on hiring new people as part of their cost-cutting efforts. Smaller companies like Bolt, Carvana, and Cameo have also let go of workers, Protocol reports. Recently, Instacart announced that it’s doing something similar to focus on profitability ahead of its planned IPO.
