Rackspace to lay off 10% of workforce and replace majority offshore

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Fin is a former junior editor at TechForge.

Multicloud solutions provider Rackspace Technology has announced plans to lay off one in 10 of its workers, with 85% of these roles being replaced through offshore service centres.

In a regulatory filing, Rackspace stated that it is “committed to an internal restructuring plan, which will drive a change in the types of and location of certain positions and is expected to result in the termination of approximately 10% of the Company’s workforce.”

Rackspace intends to refocus on “expanding its internal training programme to further develop expertise in cloud services,” such as cloud, data, and cloud native software engineering.

Affected employees were notified the same day of the filing – July 21 – and are expected to leave over the next 12 months. The restructuring means that the company will spend between £50 million and £60 million over the next 12-24 months on “severance payments, healthcare benefits and other exit costs.”

The decision is the latest in a long series of restructuring and philosophmily changes for Rackspace. Since being sold to Apollo Global Management for £3.3 billion in 2016, the now private company has seen three different CEOs in two years and a name change.

At this point, Rackspace layoffs have become an almost annual event, with the company shedding between 100 and 200 workers each year since 2017.

It laid off 275 employees – representing nearly 6% of its workforce – in 2017 after being acquired by Apollo. This new layoff is much larger and may have more significant implications for the company.

Initial estimations suggest Rackspace will cut about 700 jobs at its headquarters in San Antonio, according to Texas Public Radio.

Rackspace’s UK workers will seemingly fair slightly better, according to The Register’s sources, with fewer than 100 employees being made redundant.

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One comment on “Rackspace to lay off 10% of workforce and replace majority offshore

  1. Christopher White on

    Way to go outsourcing to a foreign country and getting rid of American jobs. I’m dumping this stock once I get to a break even point.


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