It's official: PayPal to cut 325 jobs despite strong quarter
The full-time jobs will be cut as PayPal merges nine product-development teams into one. The company will also shed a further 120 contractors.
Payments giant PayPal will shed about 325 employees as part of a major shakeup of its organization by the firm's new president, David Marcus, exactly seven months after he took office.
The full-time jobs will be cut as PayPal merges nine product-development teams into one, making PayPal a "more agile organization." The company will also shed a further 120 contractors. Most of the cuts will come out of PayPal's product and technology units.
This accounts for about 3 percent of the company's workforce. PayPal had close to 13,000 employees earlier this year, Reuters reported.
As a result, PayPal parent eBay will take a fourth-quarter pretax charge of close to $15 million.
"The intent is to simplify and speed up how products are developed. PayPal expects to continue its strong global growth momentum and leadership through online merchant expansion and share of checkout, by driving payments innovation at point-of-sale retail for large, medium, and small businesses, and by engaging consumers online and offline with payments products and experiences that offer choice, flexibility, simplicity, and security," eBay said in a statement.
The move comes as little surprise; earlier rumors suggested PayPal would see job losses, in spite of eBay's strong third-quarter earnings. PayPal was said to be cutting up to 400 jobs amid a major reorganization, according to a Bloomberg report earlier this month.
Cutting the jobs is part of Marcus' strategy to revamp the payments service in the face of competition from its rivals, notably Square and Intuit.
Confirming this to Reuters, Marcus said PayPal had to cut the jobs as the "law of diminishing returns" takes effect, saying: "You have a lot of duplication of roles with nine product groups merging into one." It's clear that the restructuring is just as much about keeping costs down in the face of a turbulent period ahead, as well as retaining the simplicity of design across the various divisions of the company.
PayPal currently has more than 117 million active registered accounts -- a 14 percent increase from the same quarter a year ago -- with revenue increasing by 23 percent year-over-year.
The company's restructuring charge will not affect non-GAAP results, PayPal said.
This story originally appeared on ZDNet under the headline "PayPal to lay off 325 jobs as expected, despite strong Q4."