The move highlights the deepening downturn in the technology sector,which surged in the pandemic amid record-low interest rates and intense investor demand,but has now come back to earth. Australia’s most successful technology company,Atlassian,said it would cut about 500 positions earlier this week.
Investors welcomed Xero’s cost cuts,with its shares surging 9.8 per cent to $78.62 after the announcement. The stock had plunged from a high of $154.47 in November 2021 to $79.62 on Wednesday’s close,hitting a low of $70.11 earlier this year.
In a statement to the ASX,Xero said the job cuts,which will affect between 700 and 800 positions,would help to streamline its business and improve profitability.
Xero chief executive Sukhinder Singh Cassidy,who took the helm only last month,said the decision had not been made lightly. In a message to employees – dubbed “Xeros” – on Thursday,she said she was deeply sorry to be taking this step. “As a leadership team and board,we are responsible for the decisions that led us here,” she said.
‘Externally,the broader tech landscape favoured high growth in this period;internally,we were less clear and measured in the rate of our hiring investments.’
Sukhinder Singh Cassidy,Xero chief
A consultation process with people potentially affected would begin next week,but “it may take up to four weeks for some people to have this conversation”,she said.
On a call with investors on Thursday,Singh Cassidy said the cuts would be across all Xero’s functions and regions. “I will note,of course,that proportionally we have higher head counts in some regions and some areas,so you can expect that there’ll be some proportionality there,” she said.