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Third Year In A Row Of February Rackspace Layoffs

Scott Beale
Rackspace's Windcrest Headquarters.

Rackspace is laying off 200 employees. This is the third February layoff in three years. The trend began shortly after the company was acquired by Apollo Global Management, a private equity firm.

The company said in a statement that like other technology companies, they are constantly rebalancing their workforce. 

"We take actions on an ongoing basis in some areas we are over-invested and hire in areas where we are under invested."

The company eliminated around 3 percent of their total workforce, and said they have nearly 200 job vacancies currently posted.

Last February, the company let go around 100 people saying they needed to shed jobs from less productive areas of the business while they continue to hire in areas of bigger growth. The same rationale was given in 2017, when the newly acquired Rackspace let go of 6 percent of its global workforce and about 200 people locally.

The company declined to say how many local employees would be let go this time, but sources with direct knowledge said it is around 200 people. 

Apollo brought the company private for $4.3 billion after several rocky years on the stock market, during which Rackspace saw its market value decline by more than half. The financial website TheStreet called the company’s stock “Truly the Worst in the World” in 2016 as big players Amazon Web Services, Google and Microsoft all entered the web hosting field.  The company then pivoted to becoming a service vendor for these once-competitors.

Since 2017, the company has acquired several companies including Data Pipe, Tri-core and most recently, in May, San Diego-based Relation Edge. There was speculation the company was interested in going public again last year.

Paul Flahive can be reached at Paul@tpr.org or followed on Twitter @paulflahive.

Paul Flahive can be reached at Paul@tpr.org and on Twitter at @paulflahive