More than 6 percent of Rackspace employees have been made redundant due to a reduction in operating expenses.
Despite the job losses, Taylor Rhodes, CEO for Rackspace remains optimistic, claiming that there will be a significant number of people employed in the future.
Rackspace went private in November 2016 after a $4.3 billion buyout by Apollo Management. The acquisition has allowed the company to restructure for long term growth. Prior to the buyout, they were struggling to keep up with the key players in the public cloud market, Amazon and Microsoft.
Apollo has demanded that Rackspace reduce their operating expenses by $100 million by the end of April.
Rackspace has assisted customers for many years to handle their information technology services. They have done so either in their own facility, within customer data centres, or on public clouds such as Microsoft msft Azure or Amazon Web Services. They also provide customers with their own public cloud infrastructure if required.
The San Antonio based company as well as Nasa, also assisted in birthing OpenStack; a technology used to construct corporate clouds.
In response to the job cuts, the company say that they have not stopped employing people in departments where there is a high customer demand.
According to reports, their international branches are also expected to experience job losses. Rhodes has stated that the cuts are manageable and necessary. “The layoffs are personally painful but we are confident that we can handle these reductions without affecting the superior customer service we deliver and the expertise displayed by the remaining employees.”
There have been a number of reports claiming that the hosting industry are going to be making cuts in several companies including Dell, Endurance International and Group brands.
Rackspace has grown significantly over the past few years, and they have evolved to become more like a partner than a competitor to Amazon and Microsoft.