Shopify, One of Canada’s largest tech giants announced that it is going to lay off 10% of its workforce. The Ottawa-based e-commerce company is going to lay off approximately around 1,000 people as its online selling business model slows down.
“For a company like ours this news will be difficult to digest,’ said founder and CEO Tobi Lütke.
At the end of 2021, the company had around 10,000 employees. This was double what they had before the pandemic. The reason for laying off so many people is that during the pandemic there was a rise in the demand for Shopify’s software.
More and more customers shifted to making purchases online. So, Shopify bet that the amount of shopping that people did online would leap ahead by five or 10 years from pre-pandemic predictions.
“We couldn’t know for sure at the time, but we knew that if there was a chance that this was true, we would have to expand the company to match. It’s now clear that bet didn’t pay off.”Tobi Lütke.
Also, people are now going back to pre-pandemic shopping habits. Though e-commerce is still growing steady, it isn’t a five year leap like Lutke thought. Thus, this has made Shopify make cuts. Lutke says that, “Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust.”
“As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that,” said Lutke. Most lay-offs will be in the recruiting, support and sales sector. People will be notified on Tuesday about this.
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What Will Shopify Pay To Laid Off Employees
All people who have been affected will get 16 weeks of severance pay. Moreover, they will get an extra week for every year they have been with the company. Also, Shopify will remove limitations on any stock options they may be entitled to.
The people laid-off will also get access to career coaching, interviewing support and resume crafting services. Additionally, Shopify will pay some of their internet costs during the severance period.
Furthermore, they can keep their home office furniture that the company gave them a stipend for. Also, they will also get “kick-start allowance” that can be used to buy new laptops. Recently, a lot of companies have been laying off workers.
Companies like Netflix, Twitter and Wealthsimple have also laid off people in the last few months. This is because inflation has risen to an an almost 40-year high.
Source: Shopify News Release
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