Michael Cannon-Brooks, co-CEO of Atlassian

Scott Mill | CNBC

Business software developer Atlasian said Monday it would lay off 500 employees, or about 5% of its workforce. Atlassian shares rose 1% in extended trading after the announcement.

The tech industry contracted slightly last year after Covid forced people and companies to change their behavior, even as unemployment rates in developed countries remain low. Competitors Atlassian Alphabet, Asana, GitLab, IBM, Microsoft and Pager have also announced job cuts in recent months as central bankers try to curb rising prices by raising interest rates.

Scott Farquhar and Mike Cannon-Brooks, co-founders and CEOs of Atlassian, said the move was not driven by financial need, but to focus on key priorities such as managing IT services and helping customers migrate workloads from on-premises processing centers data to the cloud. The cuts are not distributed across the company, they write in their blog.

The company generated about $873 million in revenue in the fourth quarter, an increase of about 27% year-over-year, although it ended the period with a net loss of $205 million. According to government statistics, the unemployment rate in Australia was 3.7% in January.

“While many teams at Atlassian are impacted, some of our most impacted teams include Talent Acquisition, Program Management, and Research and Insights,” Farquhar and Cannon-Brooks wrote. “We want to make it clear that these decisions are not a reflection of the work of our teammates. Each individual has made a contribution that has changed our company for the better and will leave a lasting impact on their peers and teams. It’s about rebalancing roles, we need Atlassian first.”

The employees Atlassian is laying off will receive 15 weeks of severance pay, plus one week for each year of service, and will be able to keep their laptops. Friday will be their last day, a spokesperson told CNBC.

Atlassian is based in Sydney. According to government statistics, Australia’s seasonally adjusted unemployment rate was 3.7% in January.

The cost cuts will result in $70 million to $75 million in costs, according to the statement.

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