Rackspace lays off nearly 300 amid shift to private company

Rackspace, a cloud hosting company based in San Antonio, cut 276 jobs, or about 6 percent of its U.S. workforce, according to a San Antonio Business Journal report.

Rackspace is also proposing somewhat smaller reductions in its offices in other countries, through consultative processes governed by local laws, said Taylor Rhodes, Rackspace's CEO, in a company blog post on Feb. 7.

"The U.S. layoffs and proposed international reductions are personally painful, but they are necessary and manageable," he wrote. "We're confident we can accomplish these reductions without any effect on the expertise and exceptional customer service we provide to our customers. We have targeted these cuts primarily toward our corporate administrative expenses and management layers, while striving to create the least impact to our frontline Fanatical Support and product teams."

Mr. Rhodes went on to say the U.S. layoffs are focused mainly in areas where Rackspace workforce has grown more rapidly than its revenue. "Other parts of our business — such as our Rackspace Managed Security offering, our OpenStack and VMware private clouds, and our managed services for Amazon Web Services and Microsoft Azure — are growing rapidly, at annualized rates in the high double digits," Mr. Rhodes said in the statement.

The layoffs begin as Rackspace works to restructure as a private company, according to the report. The report notes Rackspace is making efforts to reduce its operating expenses by at least $100 million before the end of April, per its new owner Apollo Global Management, a private equity firm that purchased the company last November.

 

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