Oracle Corp. made “major” cuts in its global workforce on Friday and more are expected to come, say multiple sources and news reports.
Sales staff and consultants working for Oracle in North America were hit hard, say sources, as well as employees who had joined Oracle recently through its acquisitions of Hyperion Solutions Corp. and BEA Systems Inc.
The number of people let go on Friday is unclear. Tim Klasell, an analyst at Thomas Weisel Partners LLC, told Computerworld that he thought the layoffs were likely to be in the hundreds or low thousands, rather than the 8,000-figure buzzing about on some blogs and message boards.
Oracle employs 84,000 people globally. An 8,000-employee layoff would amount to about 10% of its workforce.
Based on Oracle’s history of acquisitions and layoffs, as well as money the company has already publicly said it plans to spend this year on severance, it will likely keep trimming through spring of 2009.
“I think they’re doing this in waves,” Klasell said. “It’s not great for morale, but you want to make sure you don’t cut into the meat.”
One Oracle salesperson in the U.S. said they were called into a meeting Friday and told the news then. More cuts are likely to come, said the salesperson, who asked to remain anonymous.
“They’re going to have to. They’re not going to sell any [customer relationship management software] in these times,” the worker said. “BEA was very bloated, and they’ve got to prune a lot of those people out.”
According to a Dec. 22 filing to the SEC (see page 12), Oracle expects to eventually spend a total of $148 million on severance packages for laid-off employees of BEA, which it bought in January 2008.
While trying to fight off Oracle, BEA changed the terms of its severance in late 2007 so that most employees would receive between three months and 12 months of pay and COBRA health insurance if they were laid off within a year of an acquisition.
Oracle completed its $8.5 billion takeover of BEA on April 29 of last year.
Oracle has already spent $38 million on BEA severances, according to its Dec. 22nd filing, as it laid off 275 BEA employees in California, according to state records, and possibly more elsewhere.
Oracle has yet to file a notice with California’s Employment Development Department regarding Friday’s layoffs. Alerting the department with the Worker Adjustment and Retraining Notifications (WARN) is required by California state law.
However, Oracle has a history of sending WARNs only after layoffs occur. When Oracle announced in January 2005 it would lay off more than 5,000 employees from the recently acquired PeopleSoft Inc., the state only received WARNs for about 900 workers two weeks after the layoffs occurred.
Oracle declined to comment. Message boards, blogs and even the microblogging service Twitter has been abuzz since Friday about the layoffs, which had been rumored for the past two months.
For instance, a Twitter post on Friday apparently by a West Coast-based Oracle director, William Greene, wished “to those I’ve had the pleasure of working with that got laid off today at Oracle best of luck and thanks.”
“There was certainly a major event on Friday,” said Frank Scavo, a software consultant whose blog, The Enterprise System Spectator, first reported the layoffs on Friday, citing multiple anonymous e-mails sent directly to him, as well postings at his site.
One poster to Scavo’s blog, who identified themself as “Deb” and a member of an online group for former Oracle employees, Club Ex-Oracle, wrote “I can safely confirm that they had laid off 20% of the consulting staff.”
Anonymous reports also began showing up on the site layoffblog.com in late December, and accelerated on Friday.
Cuts are believed to have hit a number of locations and divisions, with Oracle’s Bangalore operations and various sales divisions the subject of multiple reports.
“Friday, Jan. 9, came as a shock! I am really sad to see my friends and colleagues being asked to leave,” a user identified as “kayc” said in a post on Monday. “There were no clear cut reasons given to them, which is strange. And, I am shocked that this happened in a company like Oracle (supposedly ‘the giant’).”
Another source who did not wish to be named told Computerworld that many of the layoffs affected sales engineers based in Silicon Valley, in particular, former employees of Hyperion, acquired by Oracle in 2007.
Oracle has set aside $47 million for severance for Hyperion employees, of which $7 million was spent between April and November of last year.
The Times of India also reported Sunday that 40 people were laid off at Oracle’s development office in Bangalore.
Oracle is not the first IT vendor to have news about layoffs become public before being officially announced.
Last week, rumors surfaced on an independent site for IBM employees that said the 386,000-employee company would lay off up to 16,000 workers, or 4% of its workforce.
Only Microsoft Corp. so far appears to have dodged the layoff bullet, though some predict layoffs are coming for it too.
Despite coinciding with the economic downturn, Oracle’s layoffs shouldn’t be viewed yet as a sign of trouble at the company, says Klasell. Layoffs are a fact of life after mergers, and Oracle had already set aside hundreds of millions of dollars for that. That doesn’t make the situation any easier for those people who were laid off, such as the Oracle salesperson, who plans to go back to school rather than seek another job.
Software salespeople seeking a new job are “looking at 18 months of hell,” the ex-employee said.