Workday disclosed plans to cut approximately 400 employees, around two percent of its workforce, in a regulatory filing released Wednesday. The reductions will hit hardest in Global Customer Operations, targeting what the company calls "non-revenue generating roles."
The cuts carry a $135M price tag: $40M in cash severance and benefits, $15M in stock compensation charges, and $80M in office space and asset impairments. The company warned the restructuring will slash GAAP operating margins by 24-25 percentage points for Q4 and 22-23 points for the full fiscal year, results it will report February 24.
This marks Workday's second major reduction in 12 months. The company eliminated 1,750 jobs (8.5% of staff) in February 2025, positioning those cuts as necessary for AI investment. CEO Carl Eschenbach framed that round as addressing a "pivotal moment" where enterprises demand AI capabilities.
The irony is sharp: Workday sells the HR and workforce management tools that enterprises use to execute their own layoffs. The company is restructuring while marketing itself as essential infrastructure for managing human capital in the AI era.
Workday has backed its AI rhetoric with action, signing a three-year OpenAI partnership to strengthen product capabilities. But the market hasn't rewarded the strategy. Shares dropped 17% in 2025 and another 15% since January 2026 on weak subscription revenue guidance.
Eschenbach has dismissed concerns about AI disrupting SaaS business models as "overblown." That claim sits awkwardly alongside two consecutive years of significant workforce reductions explicitly tied to AI strategy shifts.
The broader software sector faces similar pressure. Adobe and Salesforce lost 21% last year, HubSpot fell 40%. The question for enterprise buyers: are these AI pivots positioning vendors for growth, or are they restructuring their way through a margin crisis?
For APAC CIOs evaluating or implementing Workday, the pattern matters. The company's 63% U.S. workforce concentration and cost structure under pressure suggest potential service delivery changes ahead. Worth asking your account team about stability commitments before signing multi-year deals.