On July 3, 2024, OpenText announced a layoff of 1,200 employees for their business optimization plan for their innovation project, OpenText 3.0.
OpenText 3.0. is a three-year plan focusing on the company’s Cloud, security and artificial intelligence innovations. It’s a new stage the company is implementing after their previous information and content management stages.
“Some stakeholders might treat layoffs positively because it shifts their focus and needs to different people with other capabilities,” Sebastian Fournet, an Associate Professor of Strategic Management at Wilfrid Laurier University, said.
He explained that organizations like OpenText go through phases of growth and decline.
“Organizations restructure to emerge prepared for the next phase of the competition,” Fournet said.
Large layoffs were reported at companies like Google, which laid off multiple employees working on its hardware, voice assistance and engineering teams as a cost-cutting measure.
Reasons for these layoffs include changing work dynamics during COVID-19, leading firms to downsize and leverage global talent to introduce new employees with different knowledge and backgrounds to the workforce. The pandemic brought accelerated trends and forced organizations to adapt or risk losing business.
On July 3, 2024, Barrenechea released a blog about OpenText 3.0 saying that the optimization plan focuses on “(1) placing the right talent in the right locations of our business, (2) funding growth and innovations, and (3) completing these objectives with higher productivity, lower cost, and expanded margin.”
At the end of the blog, Barrenechea expressed his enthusiasm about how this business optimization plan will increase the company’s market shares and build positive relations with stakeholders.
Although the company did not disclose the nature and extent of the layoff, LSEG Data & Analytics said OpenText employed 24,100 staff members last June before they cut off 1200 employees earlier this month, which could lead to community backlash.
“This will have a serious effect on the faith that essentially the current people, but also the local community, has in that organization,” Fournet said.
As a follow-up to their decision, OpenText plans to introduce 800 new sales, professional services and engineering jobs. These roles target the cloud segment of the business to automate and drive productivity for workers and will seek ways to transform business processes by using AI.
However, implementing AI in business models could bring never-ending change to the workforce’s organizational needs and future technological trends, leading to other discouraging series of massive layoffs. Companies are still studying AI and its potential in the workforce, so it’s hard to determine its definite extent.
“By the time we study it, the AI model has changed or improved in some way, shape or form,” Sabah Rasheed, a PhD candidate from the Lazaridis School of Business and Economics at Wilfrid Laurier University, said.
She explains how AI is a tool that helps employees innovate and improve business strategies and corporate structure. However, she explains that despite these innovations, it’s short-sighted to lay people off with the idea that AI can replace them.
“It’s going to increase the workload and stress for the people that remain,” she said.
Layoffs and the introduction of AI restructured how organizations will operate. Whether massive layoffs will happen again in other companies, including OpenText, depends on industry trends, staffing, and company goals.
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