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Senior Editor

Rackspace is cutting 6% of its workforce

News Analysis
Feb 08, 20172 mins
Amazon Web ServicesAvayaCareers

Cuts come about 3 months after the managed hosting and cloud provider went private

Via a blog post by CEO Taylor Rhodes, Texas-based cloud computing company Rackspace announced that it is cutting about 6% of its workforce in areas that have seen slowed growth in recent years.

+MORE AT NETWORK WORLD: How Rackspace will stay alive in cloud: Stop competing with Amazon, start partnering +

Rhodes says the cuts will primarily be focused on the company’s corporate administrative expenses and management, and that the company’s “front-line” support staff and product teams will be least impacted by the layoffs. Rackspace did not provide additional details about where the cuts will come from or the specific number of employees that would be impacted, saying only they are in areas “where the workforce has grown more rapidly than the revenue.”

In September 2016, Rackspace reported that it had 6,115 workers. Six percent of that would be about 366 employees. 

Fast-growing sectors of the company’s business – notably its Managed Security, Hosted OpenStack and VMware clouds, and Managed Amazon Web Services and Microsoft Azure public cloud products – will not be cut.

“We will continue to invest and build our capabilities in these fast-growing lines of business. We have big ambitions, because the complexity and speed of change our customers are facing as they move into the multi-cloud world have never been higher,” Rhodes wrote in a blog post announcing the layoffs. He called the cuts “painful, necessary and manageable.”

The cuts come about three months after Rackspace officially went private. Apollo Global Management announced plans to buy Rackspace in August 2016 for $4.3 billion. That announcement capped off a multi-year period when rumors about the company’s potential sale swirled.

Rackspace was founded in 1998 as a managed hosting company, but has progressed to offer its own IaaS public cloud based on OpenStack, to now helping customers use public IaaS cloud platforms. For more about Rackspace’s future strategy, check out an in-depth interview with Rhodes here.

MORE: Bloodiest tech industry layoffs of 2016

Senior Editor

Senior Editor Brandon Butler covers the cloud computing industry for Network World by focusing on the advancements of major players in the industry, tracking end user deployments and keeping tabs on the hottest new startups. He contributes to and is the author of the Cloud Chronicles blog. Before starting at Network World in January 2012, he worked for a daily newspaper in Massachusetts and the Worcester Business Journal, where he was a senior reporter and editor of MetroWest 495 Biz. Email him at and follow him on Twitter @BButlerNWW.

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