Spotify, a Music streaming giant has announced its third round of layoffs. The company is set to eliminate around 17 per cent of its workforce across the company as it looks forward to becoming "both productive and efficient".
Why is the company laying off again?
In a note to the staff, Daniel Ek, the founder and CEO of Spotify said that right-sizing the workforce is critical for the company to face the "challenges ahead".
Ek has stated that the real reason for laying off the staff is the slowing economic growth and increased capital costs. He claimed that the company was using lower-cost capital in 2020 and 2021 to invest heavily in the business.
He said, "I have made the difficult decision to reduce our total headcount by approximately 17 per cent across the company. I recognise this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented and hard-working people will be departing us.”
How many jobs will be impacted by this layoff?
As per TechCrunch, Spotify has around 8,800 employees, and this job cut will impact over 1,500 employees.
What compensation will be given to those who are being laid off?
After firing the staff in the third layoff of 2023, Spotify will start with a baseline for all employees, with the average employee receiving approximately five months of severance pay. This will be calculated based on local notice period requirements and employee tenure.
Spotify will continue to cover the healthcare of the employees who will be on a severance period. All employees will be liable to get outplacement services for two months.
The CEO wrote, “I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance. We debated making smaller reductions throughout 2024 and 2025.”
This layoff is the third one in a row this year.
About previous layoffs which took place in 2023
In June 2023, the music streaming platform sacked 200 employees, which was almost 2 per cent workforce. The company removed people from its podcast division, the reason being a part of a corporate reorganisation.
Going back, in January 2023, it further slashed 6 per cent of its workforce, which was around 600 employees working with Spotify, globally.
Inputs from IANS