Days after SoftBank Group announced that it has taken control of co-working space WeWork, there is news that WeWork will be cutting down manpower strength by almost a third.
As per reports, the current employee count of around 14,000 worldwide will be scaled down to around 10,000. Out of the 4,000 to be sent out, 1,000 will be at the junior levels like the janitorial staff etc.
SoftBank COO Marcelo Claure, who was appointed as the new Executive Chairman of WeWork told employees that SoftBank is keen on aggressively pursuing the business in key geographies and swiftly increase occupancy rates everywhere. He has reportedly informed the staff that they need to turn into a leaner company to achieve their objectives.
“Yes, there will be layoffs – I don’t know how many – and yes, we have to right-size the business to achieve positive free cash flow and profitability. But I will promise you that those that leave us will be treated with respect, dignity and fairness. And for those that stay, we will ensure everyone is aligned and shares in future value creation,” a CNBC report quotes Claure as saying in an email to employees.
The office sharing startup has been in the news of late and this takeover by SoftBank was already on the cards. The official takeover was completed Tuesday and it has cost $10 billion to take full control of the coworking space provider. SoftBank has paid founder Adam Neumann $1.7 billion to quit his position on the board. He will now be only a board observer.
The Indian operations of WeWork are handled by the Embassy Group on a franchise arrangement. The group had indicated earlier that there will be no impact on their setup due to the disturbance in the US arm of the company. It remains to be seen how the SoftBank Group approaches this relationship. The Japanese investor is already present in a big way in the Indian startup horizon and reworking the arrangement if the Indian franchise is doing well already.