As part of its new business optimization strategy, OpenText Corp announced on Wednesday that it would eliminate approximately 1,200 positions, which accounts for approximately 1.7% of its workforce
Mark Barrenechea, in an open letter to stakeholders published on Wednesday, explains the cuts as a means of “placing the appropriate talent in the appropriate locations of our business, funding growth and innovations, and achieving these objectives with increased productivity, reduced cost, and expanded margin.”
The Waterloo, Ont.-based software company did not immediately respond to inquiries regarding the nature and extent of the termination. However, LSEG Data & Analytics data indicated that OpenText employed 24,100 personnel in June of last year.
According to Mr. Barrenechea’s note, the employment reduction will result in annual savings of approximately $150 million, but it will also incur one-time expenses of approximately $60 million.
The company is commencing a new era, and the relocation will be accompanied by establishing 800 new positions in engineering, professional services, and sales.
Mr. Barrenechea’s letter referred to the chapter as “OpenText 3.0 – Information Reimagined”. It stated that it continues the company’s previous phases, centered on content and cloud-based information management.
The new stage is characterized by a three-year plan emphasizing advancements in artificial intelligence, security, and cloud computing.
Mr. Barrenechea stated that the company will identify methods to drive productivity for workers and automate processes in the cloud segment of the business. The company will pursue opportunities to transform business processes in the AI segment.
It will strive to guarantee security and compliance for global enterprises across its technology.
Mr. Barrenechea expressed his enthusiasm for the forthcoming opportunities to further our development and expand our market share by assisting our customers in their transformation.
“We are confident that we will provide substantial long-term value to all of our stakeholders in conjunction with our initiatives to capitalize on strong capital allocation and pursue large margin expansion opportunities.”
According to National Bank of Canada analyst Richard Tse, the actions will generate “some organic growth in the interim until the company can engage in a more active level of acquisition activity.”
In a note to investors, he stated, “In general, we think that the actions above indicate that operating results will be difficult shortly, including the upcoming FQ4 results.”
In the most recent quarter, OpenText generated US$ 98.3 million in revenue, representing an increase from US$ 57.6 million in the previous year.
During the third quarter, the company’s revenues amounted to US$1.4 billion, a 16% increase from the previous year’s figure of US$1.2 billion.
The company successfully divested its AMC business to Rocket Software for US$2.3 billion in cash before taxes, fees, and other adjustments during the quarter.
