Venmo is an American mobile payment service that was established in 2009. It has been owned by PayPal since 2013. On January 30, 2024, PayPal, a tech giant based in California, stated that it would be cutting its staff by 9%. This news was released nearly exactly a year after a round of layoffs of a similar size. Venmo Layoffs effects on their strategic implications for PayPal.
According to a February 2023 filing, PayPal employed 29,900 employees at the end of 2022. This includes Venmo and Xoom, among its subsidiaries. The financial payments company laid off almost 2,000 employees on January 31, 2023. So, the 9% cut announced this year will likely cause the loss of nearly 2,500 positions.
CEO Alex Chriss, in a letter to the employees, emphasized the strategic importance of the layoffs, stating that they were necessary to cut down on “complexity and duplication.” The company, he said, needed to “install automation” and “consolidate” its technology.
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IT job losses as the sector trembles
According to multiple media sources, PayPal initiated a series of layoffs in January 2024. This action came several months after CEO Alex Chriss assumed his role in September 2023 and began exploring avenues to reduce company expenses.
To save expenses, the PayPal human resources department informed employees about the plans for layoffs. According to a report by The Information, layoffs will impact people in several departments. This includes engineering, research, and development.
Over a year ago, PayPal declared it would lay off 2,000 workers, or around 7% of its workforce. Since the year’s beginning, the tech sector has suffered several significant layoffs. This includes those at Google, Amazon, Microsoft, Meta, and Meta.
The high-flying IT industry is facing an economic crisis. It’s due to market weakness and customers cutting back on spending.
The San Jose, California-based business is the parent of several businesses. This includes the payment apps Venmo, Xoom, and Honey and the coupon service. PayPal stated that the layoff would have an unequal impact on different brands but provided no further details.
To make PayPal more competitive, the company has also committed to offering more products and updating the checkout procedure.
What happened to PayPal?
In 2023, PayPal revealed plans to lay off 2,000 people, or around 7% of its workforce. PayPal’s leadership team has undergone several changes in recent months. Chriss, who had previously worked at Intuit for 19 years, joined the company as CEO in September. Shortly after taking over, Chriss stated that he aimed for “a rise in revenue beyond purely transaction-related volume.”
Archie Deskus was appointed chief technology officer of the company in November. He was replaced with a previous position as chief information officer. Jamie Miller was appointed as its chief financial officer.
PayPal has grown throughout the years through acquisitions of fintech startups. However, it needs help competing with companies such as Apple and Stripe.
In January 2024, it started testing a few upgrades to its service. Some of these will use AI-driven customization. The company is also launching a new “CashPass” cash-back program called “Smart Receipts.” It includes
- personalized suggestions,
- improved checkout
- guest experiences,
- Venmo upgrades for small businesses and
- a fresh deal platform for merchants.
In December 2023, Amazon removed Venmo as a payment option. In October, customers represented by law firm Hagens Berman filed a class action complaint against PayPal. They argued that the fintech giant’s anti-steering rules limit competition against lower-cost payment providers such as Stripe and Shopify.
In May 2022, we learned that PayPal laid off dozens of employees at its San Jose headquarters.
PayPal Layoffs 2024
CEO Alex Chriss, in an email to the employees on January 30, 2024, revealed the layoffs. He described the decision as “hard but necessary,” But also emphasized the company’s commitment to its employees. He stated that the cuts would involve layoffs and “the removal of open roles” and occur “over the course of the year.” This reassures the employees that the company is taking their well-being into consideration.
A corporate spokesperson confirmed that 311 San Jose employees are among those laid off. But he did not disclose any other information.
CEO Alex Chriss, in a statement, underscored the strategic nature of the layoffs, stating, ‘We are doing this to right-size the company. This action will enable us to operate at the necessary speed to deliver for our customers and foster profitable growth.’ This decision, made under Chriss’s leadership, is a key part of PayPal’s future strategy.
PayPal made a $1 billion profit between July and September. This is according to a November filing with the Securities and Exchange Commission.
Chriss stated that PayPal employees would know if they were laid off before the end of the week. By the afternoon of January 30, engineers had flocked to LinkedIn to submit layoff notifications and “Open to Work” posts.
The reported layoffs top off a difficult month for the Bay Area’s tech industry. It’s because layoffs eased marginally in the second half of 2023.
Conclusion
PayPal layoffs add to a wave of cuts announced by technology companies in 2024. iRobot said that it would lose 350 jobs at the beginning of 2024. Microsoft laid off 1,900 people a year after cutting 10,000 from its workforce. eBay laid off about 1,000 employees.
Chriss had plans to change the company’s strategy as it dealt with industry-wide and internal issues. These issues included fluctuations at the company’s highest level following the departure of several executives in recent years. PayPal, which owns Venmo, has also faced competition from Apple Pay and Zelle.
Chriss, in a statement, acknowledged the challenges ahead but also underlined the company’s resilience. He said, “We’ve started that journey, but there’s still a lot of work to be done. 2024 will be a year of change, with some tough but vital choices. But those choices will get us where we need to be.” This instills confidence in the audience about the company’s ability to navigate through these changes.
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