Why is there Oracle layoffs? In the midst of the IT sector’s layoffs, Oracle, a US-based tech giant, entered the conflict as well. Oracle has slashed back on open positions within its health unit, withdrew job offers, and let hundreds of people go.
The massive Cerner Health IT company is part of Oracle Health, which it bought for $28 billion last year. Since the acquisition, Oracle has stopped giving raises and promotions to the unit’s employees and fired hundreds of others. This is due to the recent claims made by current and former workers. The layoffs come after corporate America made thousands of cuts. It’s because businesses struggle with high inflation and rising borrowing rates.
Oracle Corporation is a global American company with its headquarters in Austin, Texas. It deals with computer technology. Let us learn about the company in detail in this article.
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Overview of Oracle
Larry Ellison, Ed Oates, and Bob Miner co-founded Oracle Corporation in 1977. It was initially named Software Development Laboratories.
Oracle Corporation is a well-known company that creates and sells commercial computer software. According to sales and market capitalization, Oracle was the third-largest software firm in the world in 2020.
The business offers database software and hardware, cloud-engineered systems, and enterprise software products. It includes supply chain management, human capital management, customer relationship management, and enterprise resource planning software.
On December 11, 2020, Oracle declared that it was relocating its global headquarters from Redwood Shores to Austin, Texas.
A class action complaint was filed against Oracle on August 23, 2022. It is alleged that Oracle had been running a “surveillance machine.” It tracked the personal data of hundreds of millions of people in real-time and stored it indefinitely.
The business declared in February 2023 that it would provide $1.5 billion for ongoing technological investment in the Kingdom of Saudi Arabia.
Oracle’s total personnel count increased significantly during the fiscal years 2008 and 2023. It had risen from about 84,000 to 164,000. On the other hand, Oracle’s yearly revenue in FY2023 increased to a record level.
Oracle starts making cuts in the US
To concentrate on its cloud and healthcare IT services businesses, Oracle has started making layoffs in the US. The massive cloud database has begun to fire employees from its advertising and customer experience departments. It happened after the company reduced costs by up to $1 billion.
Oracle insiders added that the restructuring created “complete chaos” within the organization. A worker claimed that the advertising and customer experience teams were “obliterated” due to the change.
Many concerned employees, some of whom have worked for the company for decades, posted their opinions on LinkedIn. The CX division needs to catch up to the rest of the company’s growth. It may be one of the factors contributing to its reduction.
Douglas Kehring, executive vice president of Oracle, said during a gathering in 2022 that the division had been “a little more disappointed than it should have been.”
Chief Marketing Officer Ariel Kelman left Oracle. It demonstrates that even senior executives were affected by this change.
Why is Oracle firing staff from its health division?
Oracle’s Cerner health division recently made sizable layoffs. Healthcare records company Cerner Corporation specializes in providing hardware and software for health technology. In December of the previous year, Oracle purchased it for $28.3 billion.
The layoffs were announced on June 16. It reportedly affected hundreds of workers. According to reports, Cerner’s struggles with the US Department of Veterans Affairs caused this decision. In this project, Cerner was tasked with replacing the internal medical records of the Department of Veterans Affairs with cutting-edge technology. Delays and cost overruns plagued the project. But, the project is meant to upgrade medical records.
Due to Cerner’s difficulties, Oracle had to shift its focus to other IT and healthcare industries. This led to these layoffs. It is claimed that the affected employees will receive adequate support and severance packages. It is even though the corporation has yet to make any public declarations.
Even as recently as last month, Oracle let go of almost 3,000 Cerner employees. It includes those from the marketing, engineering, product management, accounts, and legal teams. Additionally, it has made difficult decisions, including postponing raises and promotions for this year.
Oracle’s actions were not unexpected in the IT business, as employee layoffs are a new trend. Other well-known companies in the sector, including Meta, Google, Twitter, and Netflix, also made similar moves this year.
The decline in the economy, world politics, and the increase in inflation, among many other things, are all blamed for this tendency. The tech sector is currently under a great deal of pressure. Thus, they are attempting to get over it by optimizing their use of resources and cutting costs.
Oracle is breaking the trend in the industry
Database software makers ran behind their tech rivals in developing cloud technology for many years. It fulfilled the needs of a modern company. But things are starting to change, judging by Larry Ellison’s 46-year-old business.
On June 14, 2023, Oracle shares increased 4.8% to $122.24. It closed at a record price for the fifth day in a row and the eighth time that month. The stock has increased 73% over the past year, outpacing all large-cap corporate IT firms outside Nvidia. The 2023 share price increase of more than 50% would make it the best year for stockholders since the dot-com boom in 1999.
That week, Oracle received a lift after announcing stronger-than-expected earnings and revenue. It earned the approval of many analysts. Goldman Sachs raised the stock’s rating from a sell to the equivalent of a hold.
Within hours following the results announcement, Bloomberg announced that Ellison had climbed to No. 4 on their list of billionaires. This is his current highest position. He outpaced Bill Gates, the co-founder of Microsoft. Investors are currently fascinated by this narrative. It’s not surprising. It’s artificial intelligence!
Oracle was seen as a technology has-been rather than an innovator before its recent rise. It had lost market share to Salesforce in the booming cloud industry for selling software to sales representatives. But it was still a minor participant in infrastructure as a service (IaaS), where Amazon, Microsoft, and Google were the market leaders. TikTok and Zoom brought in a lot of business for Oracle, but the big names tended to go elsewhere.
Oracle is currently experiencing rapid growth. It results from the buzz surrounding generative AI, a technology that can create visuals or text from a few human inputs. The business has invested significantly in Cohere, a productive AI firm with a business emphasis. This technology may drive copywriting, search, and summarization.
Ellison informed analysts during the earnings call that:
Customers have “recently signed contracts to buy more than $2 billion of capacity” on what Oracle refers to as its Gen 2 Cloud.
Oracle regained the lead the next year as its market cap dropped below that of the younger Salesforce in 2020. Now it isn’t even close. As of June 14’s close, Salesforce is valued at $204 billion, whereas Oracle is worth $330 billion.
Salesforce is expanding 11% faster than Oracle. Their sales increased 17% year over year in the most recent quarter.
Oracle’s cloud technology
Oracle’s cloud infrastructure revenue increased 76% year over year. Thus, it is outpacing the prior quarter’s growth of 55%. That is one fact that Goldman Sachs analysts Kash Rangan and his colleagues noted in their upgrade.
Oracle management requested no changes to capital expenditures for the upcoming fiscal year 2024. This is despite the expansion of cloud infrastructure. According to Goldman Sachs, this financial services firm is positive for creating free cash flow.
Oracle began selling cloud-based versions of software. The customers had previously used it in their on-premises data centers. It is like other enterprise-focused technology businesses. With the $9.1 billion acquisition of NetSuite in 2016, the company broadened its market.
Oracle announced the Elastic Compute Cloud in 2015. It has been nine years since Amazon Web Services’ basic EC2 computing service was launched. Oracle then unveiled its Gen 2 Cloud portfolio in 2018.
Last year, Ellison scrapped the existing cloud project and pushed for a new strategy. It’s because he said Oracle had been duplicating competitors. Ellison recently told analysts that Oracle’s cloud database might be faster and less expensive than AWS as businesses explore methods to save IT spending.
With the help of his company’s cloud, Ellison can now list many well-known companies. During its fiscal fourth quarter, Oracle singled out Dollar Tree, Exxon Mobil, and Pfizer as cloud clients.
For now, Ellison may take pride in his company’s Silicon Valley bragging rights, with so many high-profile and once-flying neighbors restructuring for the first time in their history. Compared to its competitors, Oracle has had fewer layoffs overall.
During June 2023’s Oracle results call, CEO Safra Catz took a moment to thank the company’s clients and staff.
The recent Layoffs have become a big concern for industry workers. It is because companies in the IT sector strive for efficiency, strategic realignments, and long-term sustainability in the market.
The industry’s ongoing development should keep an eye on the safety and happiness of its workers. The problems raised show how crucial it is to find a balance between clearing project obstacles and giving the welfare of the employees a top priority.