GoDaddy, an internet domain registrar and web hosting company based in Arizona, recently announced that it will be laying off 530 workers, or 8% of its global workforce. The layoffs are part of the company’s effort to streamline operations and increase profitability. The Hiawatha customer service and support center in eastern Iowa will be affected, with 35 workers losing their jobs by May 1. The center is also in the process of moving to Cedar Rapids later this year.
CEO Aman Bhutani released an open letter explaining that while the company had made progress on its 2022 strategic initiatives, it was not sufficient to avoid the impacts of slower growth in a prolonged and uncertain macroeconomic environment. All employees affected by the layoffs will receive 12 weeks of paid administrative leave with continued core benefits coverage, as well as four or more weeks of severance pay depending on how many years they have worked for the company.
Despite the layoffs, GoDaddy has been doing well financially, posting a 45% increase in income over the prior year, according to its most recent financial report. The company has also spent $1.3 billion in the past year on stock buybacks, which some critics argue is a misuse of funds that could have been used to retain employees. The layoffs are expected to save the company around $55 to $65 million, which represents 5% of its stock buyback spending.
The layoffs come as a surprise to some, as GoDaddy had previously announced plans to expand its Iowa operations. However, the company’s focus on increasing profitability and streamlining operations appears to have taken priority. The impact of the layoffs on the affected employees and the local community remains to be seen.
GoDaddy is a publicly-traded company that provides web hosting and domain registration services to businesses and individuals around the world. The company has been on an aggressive stock buyback program in recent years, spending more than $1.3 billion in the past year alone to buy back its own stock. This move has been criticized by some investors who believe that the company should be investing more in its own growth and innovation rather than returning capital to shareholders through buybacks.
The decision to lay off employees while continuing to buy back stock has raised further concerns among investors and analysts. Some have argued that the company’s focus on short-term financial gains through buybacks could be coming at the expense of its long-term growth prospects.
Despite the layoffs, GoDaddy remains one of the largest technology employers in Iowa, with several hundred workers still employed in the state. The company has also continued to expand its presence in other parts of the country, including a recent expansion of its offices in the Seattle area.
This latest round of layoffs comes as many companies around the world continue to grapple with the economic fallout from the COVID-19 pandemic. While some industries have seen record growth during the pandemic, others, like the travel and hospitality industries, have been hit hard by reduced demand and government-imposed lockdowns.
The technology sector has been relatively resilient during the pandemic, with many companies seeing increased demand for their services as more people work and shop online. However, even technology companies are not immune to the economic pressures created by the pandemic, and many have had to make difficult decisions like layoffs and furloughs to maintain their financial health.