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WeWork lays off staff, restructures amid COVID-19 setback

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 08 May 2020

Embattled shared workspaces company WeWork says it will lay off some of its employees globally, as it undergoes restructuring to stabilise its business, after suffering severe setbacks due to the impact of the coronavirus (COVID-19).

Amid an ongoing lawsuit against its funder SoftBank, over a cancelled $3 billion tender offer, the troubled company has taken on another battle as the COVID-19 pandemic negatively affects its bottom line.

Hit by significant declining demand from tenants, WeWork told ITWeb in an e-mail interview that the current economic upheaval has resulted in it introducing a restructuring process, with plans to shed its workforce, as part of its renewed focus on the core WeWork business.

“As WeWork continues to execute its strategic five-year plan, we are realigning certain functions and teams to reflect our business priorities,” said a WeWork spokesperson.

“WeWork is currently going through a planned restructuring, first announced to employees in February, as we align certain functions to the priorities of the company’s long-term strategic plan for profitable growth with the goal of creating a more efficient organisation.”

According to the company, the restructuring process began in April.

WeWork is one of the biggest operators of shared workspaces across the globe, with 739 locations and around 662 000 members worldwide at the beginning of 2020.

However, thousands of WeWork tenants across the globe have reportedly either cancelled their lease agreements or refused to pay rent.

It is not clear how its South African offices will be affected by the restructuring.

The shared workspaces company has become the latest digital economy firm to confirm job cuts, after Uber, Airbnb and Lyft also announced they will retrench thousands, as a result of the economic downturn caused by the repercussions of the COVID-19 epidemic.

Digital home rental business Airbnb is cutting 1 900 jobs, while ride-hailing firms Uber and Lyft plan to axe 3 700 and 982 employees, respectively.

The deadly pandemic has gripped nations across the globe, claiming the lives of over 270 000people, with an infection rate of over 3.9 million, while recoveries are at more than 1.3 million, at the time of publication.

Financial analysts have predicted that an escalation in the coronavirus pandemic could cut the global gross domestic product growth rate of 2.9% in half, resulting in a recession for some countries.

As a result, more retrenchments are expected across sectors, with some companies expected to become casualties of the crisis.

Revamping for post-coronavirus

WeWork is going through a second round of job cuts after the company laid off 2 400 of its global employees, following an $8 billion take-over bid by SoftBank in October.

The deal came after WeWork was on the verge of collapse after a failed initial public offering.

However, the investment agreement has not worked out as planned, with WeWork co-founder and former CEO Adam Neumann recently filing a lawsuit against SoftBank, accusing it of abusing its power in order to terminate a $3 billion tender offer to the office-sharing company’s shareholders.

In a bid to keep its business afloat, the co-work spaces company says it has now revamped its spaces and services to maintain hygiene, safety and physical distancing best practices, across its global businesses, including its three local buildings.

“In South Africa, as we enter level four of lockdown, we have implemented some changes in our buildings such as additional wipes, controlled spaces – so meeting rooms will only allow a certain amount of people in and will be reflected in the app-based booking system our members use.

“Our Community Teams across Johannesburg and Cape Town are now back in our buildings; however, events will continue to be delivered virtually and we look forward to resuming in-person events when we are able to.”