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Ontario, Canada-based OpenText has announced that it will lay off about 1,200 employees, which is around 1.7% of its workforce, as part of a new business optimization plan.

Back in January 2023, the company announced layoffs with the closing of its $5.8 billion acquisition of British rival Micro Focus, which hit 8% of its workforce.

These layoffs will cost the information management company nearly C$60 million ($44.01 million USD), which will be accounted for in the first quarter of fiscal 2025. However, OpenText anticipates saving C$150 million in expenses in 2025.

Reinvestment and new roles

The company plans to reinvest C$50 million annually to create 800 new sales and engineering roles, all aimed at supporting its growth and innovation efforts.

“The plan is expected to result in the reduction of approximately 1,200 positions across the company, with an annualized cost savings of approximately $200 million, as well as the reinvestment of approximately $50 million annually for approximately 800 new roles in sales, professional services and engineering,” the company said. “The business optimization plan is intended to strategically align the company’s workforce to support its growth and innovation plans.”

Further details about the business optimization plan will be shared in August when OpenText announces its fourth-quarter and full fiscal year 2024 results.

CEO’s perspective on the layoffs

Mark Barrenechea, CEO and CTO of OpenText, addressed the layoffs in a blog post where he introduced “OpenText 3.0 – Information Reimagined through the Power of Cloud, Security, and AI,” a three-year strategic plan for the company.

“In further support of OpenText 3.0, today we announced a business optimization plan focused 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,” said Barrenechea.

Industry reactions

“While I hate to see any layoffs happening, this appears to be part of a larger industry trend of corrections happening the last few months to shore up and protect returns for investors,” said Henry Timm, CEO of Phantom Technology Solutions. “I’m interested to see specifically what departments the cuts impact the most or if it’s a general cut. Whenever I hear of a vendor in our space making cuts, my immediate fear is that it’ll be primarily in the partner support and product dev teams which typically signals a prioritization of extreme short term profit for shareholders over a companies long term client partnerships.”

Timm goes on to say that ideally, all departments equally share in any layoffs unless there is a larger strategic reasoning that’s shared for a more focused approach.

“Given the recent Pillr acquisition by OpenText, I assume several of these layoffs may be related to redundant staffing. It will be interesting to see as more details emerge,” Timm added.

OpenText isn’t the only company making cuts as part of a larger effort to streamline its operations and concentrate efforts on key strategic areas. Read how the recent Amazon Web Services (AWS) layoffs were part of a supposed strategic move to reallocate resources.