DocuSign Layoffs Sees Company Slashing 10 Percent More Of Workforce

• DocuSign has made a statement on its second round of layoffs, reducing its headcount by 10% more and affecting 680 employees
• DocuSign’s shares were up 3% on Thursday at the news
• More tech companies are beginning to announce second rounds of layoffs, suggesting the industry’s staff cuts are far from over

The tech layoffs are still coming in thick and fast. As the industry struggles with pandemic-level staff numbers in the face of inflation and recession, record numbers of employees are being let go to try and improve efficiencies.

DocuSign has been the latest to make more cuts to its headcount, announcing a further 10% of staff to be axed in the coming weeks. It follows the mega-sized layoffs of Big Tech giants like Microsoft, Meta and Amazon which led the charge.

It’s also becoming clear that companies who have already announced staff cuts may be looking to make more in the coming weeks.

With all of the uncertainty, it can be hard to predict the effect on your investments. Our Portfolio Protection feature uses AI to predict and respond to risk so you can shore up your strategy and reduce market exposure.

Download Q.ai today for access to AI-powered investment strategies.

What’s happened with DocuSign?

Digital signatures company DocuSign has announced it’s cutting a further 10% of its staff, adding to the 9% layoffs round from September last year. Roughly 680 employees will be affected.

After demand for digital signatures boomed during the pandemic, the company’s headcount had roughly doubled by 2021. The pandemic winner is now looking to make cuts to sure up their future.

“This action allows us to reshape the company to more effectively position us for profitable growth while freeing up resources for investments,” a spokesperson said.

DocuSign will be taking a $25m-$35m impairment charge hit with the restructuring plan, which will likely be wrapped up by the end of Q2.

Have other companies made layoffs this week?

Big Tech layoffs’ waterfall effect seems to be trickling down to smaller tech companies, some of which are onto swinging the axe for the second time.

Twilio kicked off the week with the unhappy news that 17% of its global staff, roughly 1500 employees, would be cut. The cloud software provider had already done a layoff round back in September, where 11% of employees were fired.

Udemy employees weren’t feeling the love as its CEO, Gregg Coccari, announced on Valentine’s Day that the ed-tech company was shrinking its global workforce by 10%. “The macroeconomic environment continued to deteriorate in the back half of last year and we are not immune to this challenging environment,” Coccari said in a statement.

The next day, Wix confirmed its second round of layoffs was taking place, affecting 370 employees. It had previously cut its workforce with the closure of Wix answers in September last year. President of the website-building company Nir Zohar blamed the economic slowdown on a “need to staff a smaller customer service”.

The total number of laid-off employees in 2023 alone is now at nearly 108,000 according to the layoffs tracker.

What’s the market reaction been?

In 2020, DocuSign shares skyrocketed 200% as the pandemic’s overwhelming need for tech to make home-based working possible boosted the industry. But the gains were short-lived, with shares slumping as they lost nearly two-thirds of their value in 2022.

On the flip side, asset management behemoth BlackRock has continued to invest in the company. It recently announced it has bought another 1.8m shares for a total 6.7% ownership stake.

Wall Street is looking for signs tech companies are running lean and efficiently to see out the economic storm, so DocuSign’s layoffs had a favorable market reaction. Shares were up 3% by Thursday afternoon trading, while the company’s stock price is up roughly 20% since the beginning of the year.

Why are there so many layoffs?

It feels like every tech company out there is looking to trim the fat after inflating their workforce to meet the demand of the pandemic. Now we’re seeing a mix of layoffs, CEO salary cuts and restructuring as tech scrambles to stay solvent.

One notable exception to the layoffs trend has been Apple, which hasn’t announced any layoffs for its core workforce yet (though it has quietly dropped contractors from third-party companies). CEO Tim Cook has said Apple layoffs will be “a last resort”, though “you can never say never”.

Cynics could argue additional layoff rounds are a desperate grab for the stock price to increase and keep concerned investors at bay. Tech companies has typically seen shares go up in value after announcing staff cuts.

But the more likely reason is that most businesses are battening the hatches for a prolonged period of high inflation. While talks of a recession remain, the market isn’t likely to improve soon.

What’s US inflation doing?

The Federal Reserve aims to cool down inflation by bringing it down to a target 2% rate, but recent conflicting data sets have made the path forward less than straightforward.

Even though inflation has dropped seven months in a row in the US, there’s still cause for concern. Inflation decreased marginally in January, down 0.1% from 6.5% in December. The inflated housing and rental markets, gas prices and food have all contributed to the meager drop.

New data for producer prices in the US rose higher than expected in January. Combined with the 53-year-low in unemployment rates announced a couple of weeks ago, it prompted concerns over whether inflation will still be running hot later in the year.

Analysts now predict the Fed will continue to raise interest rates, potentially hitting highs of 5.25% before the economy begins to head in the right direction.

This hits the tech industry’s bottom line by making borrowing much more expensive to pay back and difficult to secure in the first place, while investor money continues to dry up.

It’s further proof that there’s no quick fix to sorting out an economy ravaged by record-low interest rates, a pandemic and Russia’s invasion of Ukraine – plus another sign that tech layoffs will continue for the foreseeable future.

Is it all bad?

Not necessarily. Laid-off Big Tech employees can now be snapped up by smaller companies that couldn’t afford the inflated salaries the likes of Meta, Microsoft and Google were offering. Even with the layoffs, the headcounts at tech companies are higher than pre-pandemic levels.

The focus on disruptive tech like artificial intelligence could also reshape the tech market, creating new roles and boosting the economy in the long term. Stocks in AI companies have been booming since the release of ChatGPT.

We’re in for a difficult year, but if the Fed can get inflation under control we could soon see the return of the good times for tech.

The bottom line

Layoffs in the tech industry are a given now considering how much these companies expanded during the pandemic, but they’re not unique. A lot of the economy is suffering from high inflation – so it’s up to the banks to get a handle on things as quickly as possible.

Worried that sustained high inflation and general uncertainty could keep eating into your investment gains? AI powers Q.ai’s Portfolio Protection tool to analyze risks and reduce exposure so you can have peace of mind.

With powerful hedging strategies and a risk detection system, you can help protect your portfolio from downturns in the market.

Download Q.ai today for access to AI-powered investment strategies.