Save content
Have you found this content useful? Use the button above to save it to your profile.
Xero logo
Xero

Xero to lay off up to 800 staff as tech downturn spreads to accounting

by

Cloud accounting platform Xero has announced it is cutting around 15% of its global workforce in an effort to cut the company’s operating cost base and improve profitability.

9th Mar 2023
Save content
Have you found this content useful? Use the button above to save it to your profile.

In an announcement to investors, Wellington-based Xero stated that cutting its workforce will “realign the business to drive greater operating leverage and better balance of growth and profitability”.

It is not yet clear exactly where the job losses will occur, but in an open briefing following the announcement Xero CEO Sukhinder Singh Cassidy told analysts to expect the cuts to come across all regions and functions, with those areas with higher headcount affected proportionately. 

If fully enacted, the job losses take Xero’s staffing levels down to around 4,100 – roughly where this number was in September 2021. The cuts are part of a plan to balance growth and profitability, and target an operating expense-to-revenue ratio of around 75% for the group’s next financial year (2024).

Streamline and simplify

“We have made strong progress in executing our strategy,” said Singh Cassidy in a statement. “However, as we aspire to build a higher-performing global SaaS [software as a service] company and to enable Xeroʼs next phase of growth and drive better customer outcomes, we need to streamline and simplify our organisation.

“We don’t take these decisions lightly and we recognise today is a very hard day for our people,” she continued.

In a blog to employees following an all-staff meeting yesterday, Singh Cassidy stated she was “deeply sorry” for the news. “I want to make it clear to all Xeros [Xero employees] that, as a leadership team and board, we are responsible for the decisions that led us here.”

During the briefing, Singh Cassidy highlighted the possibility of more job cuts in July, stating the company will look to redesign the way it works across its key functions – although changes will be “of a smaller magnitude”.

Xero also announced its plans to exit cloud-based lending platform Waddle, which it acquired in 2020 for $31m. The company stated it expects to incur a write-down of $30–40m in FY23 as a result of this decision, but no information was given about how the exit will be managed.

As news of the shake-up was announced, Xero’s share price surged 10% on the Australian Stock Exchange, where the company is listed.

Tech job loss contagion spreads to accounting

The move echoes similar moves across the wider technology landscape, with significant job losses announced at Microsoft, Amazon and Salesforce in 2023. Across the board, companies are citing deflated expectations for the year ahead, a potential recession caused by inflation and interest rate hikes, over-ambitious hiring, and revenue growth targets missed.

This contagion had spread to the accounting tech market to some degree, with onboarding tool Ignition reducing its workforce by 10% and practice management software Karbon cutting 23% of staff to “provide the runway necessary to reach profitability”.

However, in sheer scale, the Xero cuts dwarf anything that has come before in the wider accounting industry. 

Silicon Valley veteran Singh Cassidy took up the role of Xero Group CEO on 1 February 2023, succeeding Steve Vamos who had spent four-and-a-half years at the helm following founder Rod Drury’s decision to step back from operations.

10 March 2023: This article was updated to add a line clarifying the status of the Waddle exit.

Tags:

Replies (23)

Please login or register to join the discussion.

avatar
By Catherine Newman
09th Mar 2023 08:35

I have a look at People Per Hour but rarely apply for jobs as most of the people wanting book-keepers or accountants use Xero. I did a Xero course but have never used Xero.

I was intending to the course again but can't find how to start and have other things to do with my time.

What are the more trendy packages?

Thanks (0)
Replying to Catherine Newman:
avatar
By C Graham
09th Mar 2023 19:17

sorry don't quite understand your response here?

Thanks (0)
Danny Kent
By Viciuno
09th Mar 2023 09:12

Problem with Xero is that it has shifted focus from being a bookkeeping package. Most of the add-ons are pretty cr*p and the money wasted "making their product beautiful" would be better spent making it functional. It's not like people are not paying enough. Costs a fortune compared to it's competitors and frankly, isn't that much better.

Here's an idea Xero - get back to focusing on your accountant and bookkeeping partners. What do we really need? What would make our, and therefore our client's, lives easier? What would get us to move more clients onto the package?

Accountants and bookkeepers are the ones that will drive real growth; Enough money wasted on the marketing bull.

Thanks (4)
Replying to Viciuno:
By ireallyshouldknowthisbut
09th Mar 2023 09:59

Quite agreed. The core package has had little development for years, but they bank vast amounts of money from the every increasing fees and spend wildly on mass marketing and developing sub-par 'me too' products.

I would have a lot more clients on its but its really flippin expensive. I havent added many people to it for years

Thanks (0)
Replying to ireallyshouldknowthisbut:
avatar
By C Graham
09th Mar 2023 17:04

despite hundreds of requests for the facility you still cannot run a 30 60 90 day statement on Xero - it is one of the most basic facilities needed but they focused on redesigns of the landing pages and then screw ed up the normal screen views because they wanted to make Xero work on phone apps! They also focussed on the affiliates - expense apps, stripe and gocardless etc. They will be replaced as a serious accounts tool if they carry on this way. No big company with serious global clients would ever need most of what they offer.

Thanks (2)
Replying to C Graham:
Tornado
By Tornado
09th Mar 2023 17:48

Can Xero deal with Annual Accounting dates that are not at a month end?

Although this may not be so important in the future, there will be many people still wanting to stick to a 5th April year end, many of my clients included. I can easily deal with any year end date at the moment, but can Xero.

Thanks (0)
Replying to Tornado:
avatar
By C Graham
09th Mar 2023 19:14

why would you do that? vat q for example never end mid month? surely you would just adjust for a year end date of 31 march

Thanks (0)
Replying to Tornado:
John Toon
By John Toon
09th Mar 2023 22:40

Tornado wrote:

Can Xero deal with Annual Accounting dates that are not at a month end?

Although this may not be so important in the future, there will be many people still wanting to stick to a 5th April year end, many of my clients included. I can easily deal with any year end date at the moment, but can Xero.

It can, it didn't use to be able to

Thanks (0)
avatar
By ABC12
09th Mar 2023 10:56

Maybe stop with the Apple-esque Whoop Whoop conferences to save money

Thanks (4)
avatar
By paulwakefield1
09th Mar 2023 10:58

Xero seem completely disinterested in improving their core offering. Many people have been requesting for a facility to mark invoices as in dispute or to put them on hold. A fundamental requirement for all but the smallest of businesses.

Xero have stated they have no intention of implementing it.

Thanks (4)
Replying to paulwakefield1:
avatar
By C Graham
09th Mar 2023 17:07

totally ignore their main users and raison d'etre. moving to phone apps and Stripe payments appealing to influencers at the oblivion of their real market for big customers.

Thanks (0)
Tornado
By Tornado
09th Mar 2023 11:37

“We have made strong progress in executing our strategy,” said Singh Cassidy in a statement. “However, as we aspire to build a higher-performing global SaaS [software as a service] company and to enable Xeroʼs next phase of growth and drive better customer outcomes, we need to streamline and simplify our organisation.
“We don’t take these decisions lightly and we recognise today is a very hard day for our people,” she continued.

Don't you just love this imaginatively contrived explanation for dumping 15% of the workforce.

I too have never used Xero as there are so many other alternatives. Perhaps that is the problem, too many SaaS providers chasing after a limited market.

Thanks (3)
avatar
By Postingcomments
09th Mar 2023 13:47

Baffling that anyone can need that many staff to write a bookkeeping package.

Are they all marketing types and people tying up deals with banks etc - so that they get to clients first, who then present their new accountant with Xero as a fait accompli?

Thanks (0)
Replying to Postingcomments:
avatar
By C Graham
09th Mar 2023 19:16

it isn't a bookkeeping package at all? But it fails at the upper end of being a serious company platform. All companies that do mtd have to do it on approved software of which Xero is one.

Thanks (0)
avatar
By Halex
09th Mar 2023 15:40

But amusing to see the other on-line packages i.e. Quickbooks and Sage with their copycat roll out.
I used to love Xero but find it less appealing the more is added that is not core. Stick to bookkeeping automation. How about looking at better payables automation from PO to payment - far too much of the authorisation process is off-line. If it's a one man business where there is no authorisation process then fine but once beyond a handful of employees you need clear authorisation process .
Also - why bother with all the reports revamp - the old ones worked just fine, especially the P&L reports. Sometimes feel Xero spend too much time listening to a handful of accountancy practices instead of their business customers.

Thanks (3)
Chris M
By mr. mischief
09th Mar 2023 16:09

Wow! I never thought I'd see the day on here when we have a Xero thread and none of the first 8 replies are saying how wonderful it is. The times they are a'changing.

Thanks (3)
Replying to mr. mischief:
avatar
By Open all hours
14th Mar 2023 14:13

The guys who wrote the replies are in the 15%?

Thanks (0)
avatar
By D V Fields
09th Mar 2023 19:35

They even call their staff, pronounced I think as “Zero(s) with an X”
Charming Company.

Thanks (0)
Replying to D V Fields:
Routemaster image
By tom123
10th Mar 2023 07:53

Zerox then!

They may as well have said "plebs" or "peasants".

Phrases like that work in settings like Scouts - you can address groups of children as "Beavers" and they are perfectly happy.

With adults - less so, I find.

Thanks (0)
By amalonio
10th Mar 2023 12:59

We're coming up on 10 years using Xero as a firm and it has been fantastic for us and our clients. I love it! Quickbooks and Sage are terrible in my opinion and their support is dreadful too.
Though I agree they are trying too much in terms of add ons and would be better focusing on the core product as it is, there is no need for their analytics suite for example which I assume must have cost a lot in terms of R&D. This story is the same as a lot of big tech firms, Google, Facebook etc that have cut jobs as the growth they had predicted isn't happening due to the global economy downturn.
Xero is still great software for SME's and will continue to be for £28+vat p/m it's not super expensive really for what it does.

Thanks (2)
avatar
By [email protected]
11th Mar 2023 15:41

So agree with the other posts
Xero used to be a wonderful system but the changes over the last 3-4 years are awful!
They don't listen to the bookkeepers and the accountants using it day in day out and just go for more money making bells and whistles that add no value whatsoever to the core accounting and bookkeeping functions.
The new reports are horrendous and don't fulfil standard accounting requirements!
Their 'support' is non existent!
So, so disappointing! Get back to good old fashioned bookkeeping and accounting!

Thanks (0)
Jozef Behr
By jozefbehr
21st Mar 2023 10:30

Great source of the information , i love to read it .. ..

Thanks (0)
avatar
By 8441686
24th Mar 2023 12:27

Xero customer service standards are dreadful.

In a recent interaction regarding their Gross to Net pay reconciliation, they acknowledged it fails to include expenses reimbursed in the payslip.

So Xero knows that a go-to report that payroll preparers rely on doesn't reconcile, and that's not a priority for Xero. The support specialist advised me, "I am unable to advise on when this is expected to be implemented in the Gross to Net report. I am only able to suggest voting on the product idea as a method of gaining visibility for the desire to have this functionality".

Xero doesn’t appear to have any pride in its product. If it did, Xero would take ownership of it and fix it immediately without requiring a vote.

Thanks (0)