Rackspace reveals plans to cut ten per cent of its workforce

Cloud provider will use savings to “to fund approximately $65m to $70m in new investments"

Cloud service provider Rackspace has announced plans to cut ten per cent of its workforce in a significant restructure of the business.

In an SEC filing, the company said it plans to replace "around 85 per cent of these roles" through the company's offshore service centres.

"The rebalance in workforce is a component of a broader strategic review of the company's operations that is intended to more effectively align the company's resources with its business priorities in high growth areas," Rackspace said in the notice.

"Substantially, all of the employees impacted by the reduction in force were notified of the reduction on July 22, 2021 and will exit the company over the next 12 months."

Rackspace estimates that the restructuring will see the business incur expenses of "approximately $70m to $80m", which will consist primarily of termination benefits, but that it "expects to realise approximately $95m to $100m in gross annual savings" once the restructuring plan is finished.

The savings are expected to be used "to fund approximately $65m to $70m in new investments in fast-growing product and service offerings", the company added.

This includes "cloud migration, elastic engineering, cloud native application development, artificial intelligence, machine learning and security services", as well as "new service development efforts, additional delivery capabilities, go-to-market enhancements and expansion of best-shoring centres of excellence".

It also plans to expand its internal training program "to further develop expertise in cloud services".