Workday plans to cut approximately 2% of jobs through workforce reorganization
Enterprise software provider Workday announced plans to eliminate about 400 positions, or about 2% of its global workforce. The move is part of a broader reorganization to realign company resources around strategic priorities.
The HCM software giant disclosed the restructuring in a regulatory filing on Wednesday, saying it will primarily impact “non-revenue-generating” customer-facing roles within its global customer operations team.
The company emphasized that despite the cuts, it plans to continue hiring throughout fiscal 2027 in what it describes as “key strategic areas,” including revenue-generating positions designed to capitalize on emerging market opportunities.
Financial Impact and Restructuring Schedule
The restructuring will result in costs of about $135 million during the fiscal fourth quarter that ended in January. This financial impact highlights the scale of the reorganization, even though the company maintains that its overall financial performance remains normal in line with previous guidance.
The $135 million claim is made up of several components. About $40 million will be used for future cash expenses, primarily including severance pay and employee benefits for affected workers. Another $15 million of non-cash costs relate to stock-based compensation adjustments resulting from workforce reductions.
The largest portion of the costs, approximately $80 million, comes from non-cash costs related to office space and long-term asset impairments.
Workday expects to substantially complete its reorganization by the first quarter of fiscal 2027.
The restructuring will also impact profitability metrics reported by Workday. The Company currently expects its fourth quarter GAAP operating margin to be 24 to 25 percentage points lower than its non-GAAP operating margin, and its full-year GAAP operating margin to be 22 to 23 percentage points lower.
Workday’s restructuring history and recent trends
This is Workday’s second major workforce reduction in just one year. Last February, the company laid off about 1,750 people, or about 8.5% of its workforce at the time, and explicitly cited AI as the motivation for the decision.
This initial restructuring signals Workday’s recognition that AI technologies are beginning to reshape operational efficiency requirements within the enterprise software sector.
Nothing in the current announcement explicitly mentions AI as a factor in the latest cuts.
Early 2026 will see significant advancements for HCM platform providers beyond workforce alignment.
In January, a federal judge authorized sending notices to potential plaintiffs in a landmark case alleging Workday’s AI-based recruiting tools discriminate against certain job seekers. This case represents one of the first major legal challenges to AI-based recruitment technology and could have far-reaching implications for the industry.
Days after the legal proceedings got underway, Workday announced ambitious expansion plans to invest C$1 billion in its Canadian operations over the next five years.
This substantial commitment to Canada’s technology sector demonstrates the company’s continued confidence in long-term growth opportunities while streamlining operations elsewhere.
Where does Workday go now?
Workday’s recent restructuring, targeting non-revenue generating positions while expanding into strategic areas, marks a change in direction.
For employees, customers and investors alike, the coming months will reveal whether this realignment has achieved its intended goals.
Workday’s upcoming earnings report on February 24 will provide the first opportunity to evaluate how the restructuring aligns with the company’s broader financial performance and strategic vision.