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SaaS provider says layoffs target non-revenue roles as it retools priorities, with costs weighing heavily on near-term financial results.
Workday is laying off about 400 employees, roughly two percent of its global workforce, as the enterprise software company seeks to realign staffing with what it describes as its “highest priorities.”
The job cuts, disclosed in a regulatory filing, will fall hardest on non-revenue-generating roles within its Global Customer Operations organization and are expected to significantly reduce operating margins for both the current quarter and the full fiscal year.
The workforce reduction marks the second major round of layoffs at Workday in just over a year and underscores the pressure facing SaaS companies as customers scrutinize spending, slow hiring, and demand greater efficiency from vendors.
Workday said the layoffs are part of an effort to streamline operations and focus resources on areas with the greatest strategic and financial impact. While the company did not provide granular details on which functions or geographies would be most affected, it indicated that the cuts would primarily impact support roles that do not directly generate revenue.
That filing makes clear that the move will come with a substantial short-term financial cost. Workday estimates it will incur approximately $135 million in charges related to the restructuring.
Those costs will weigh heavily on profitability in the near term, even as the company argues the cuts are necessary for longer-term efficiency.
The announcement represents a sharp reversal from the tone Workday struck just a few months ago. During its earnings call in November, the company said it was executing well against efficiency goals and projected quarterly GAAP operating margins of 9.5 percent, with full-year GAAP margins expected to reach eight percent.
That outlook has now shifted dramatically.
Workday said it expects GAAP operating margins to be 24 to 25 percentage points lower for the quarter and 22 to 23 percentage points lower for the full fiscal year as a result of the restructuring charges. The updated figures will be reflected in its next earnings announcement, scheduled for Feb. 24.
The magnitude of the margin impact highlights the financial trade-offs companies face when pursuing workforce reductions: while layoffs are often framed as cost-saving measures, the upfront expenses tied to severance, benefits, stock compensation, and real estate impairments can significantly depress earnings in the short term.
By focusing the cuts on Global Customer Operations, Workday is signaling a shift in how it balances customer support with profitability. Support teams are essential to retaining enterprise customers, particularly for complex HR and finance platforms like Workday’s, but they are also costly and do not directly contribute to top-line revenue.
Industry analysts have noted that SaaS vendors are increasingly scrutinizing support functions as they seek to automate more services, push customers toward self-service tools, or consolidate operations. However, reductions in support staff can carry risks, including slower response times, reduced customer satisfaction, and potential churn if service quality declines.
Workday did not address whether it plans to offset the job cuts with increased automation, outsourcing, or changes to customer support models.
The latest layoffs follow a much larger reduction announced last February, when Workday said it would cut eight percent of its workforce, or roughly 1,600 jobs. At the time, the company cited macroeconomic uncertainty and the need to prioritize investments as reasons for the move.
As of January 2025, Workday reported a global workforce of more than 20,400 employees across 34 countries, with approximately 63 percent based in the US. The new cuts suggest that the company’s earlier restructuring did not fully insulate it from ongoing pressures in the enterprise software market.
Workday’s decision comes amid a broader trend of cost-cutting across the SaaS sector. Many enterprise software vendors are grappling with slower deal cycles, customers delaying expansions, and heightened scrutiny of subscription renewals. At the same time, companies are investing heavily in AI features and platform enhancements, forcing tough choices about where to allocate resources.
By targeting non-revenue roles and absorbing a substantial margin hit now, Workday appears to be betting that a leaner cost structure will position it more competitively once enterprise IT spending stabilizes.
Whether that strategy pays off will become clearer later this month when the company reports earnings and investors assess both the immediate financial damage and the longer-term outlook for growth and customer retention.
Amazon is once again trimming its workforce in Washington state, with nearly 2,200 employees expected to lose their jobs this spring.
