In a shocking news to employees of SoundCloud, the digital music service provider has decided to sack a huge number of its employees and also shut down its offices in San Francisco and London. Though SoundCloud had already talked about being at risk of running out of money in January this year, the company’s announcement on Thursday of its cost-cutting move that will slash 40 per cent of its staff from its payrolls came as a surprise, reported AdvertisingAge India. As per the report, the cost-cutting exercise will eliminate as many as 173 jobs. It had 420 employees. After the move, the operation of the company will be consolidated at its headquarters in Berlin and another office in New York only. However, the company is calling the layoffs as a way to have a better financial footing that will help it to compete against larger rivals – Spotify and Apple. In a blog post published on SoundCloud’s website, its co-founder and chief executive officer (CEO) Alex Ljung said that they need to ensure their path to a long-term and independent success. The CEO explained about the cuts that its goal is to remain a standalone business. By reducing costs while continuing on its revenue growth, the company is on the path to profitability and thereby ensure company’s independent future, as per a report.
SoundCloud has reportedly about 175 million listeners of songs, dance mixes, podcasts and other user-generated content. Its major competition is from Spotify and Apple Music. While Spotify claimed to have more than 140 million users and more than 50 million subscribers in June, this year, Apple Music said its music service has 27 million customers. However, now with this cost-cutting move, SoundCloud is said to have a better financial footing to compete against these larger rivals, added the report.
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It seems to have a difficult period for employees, as there have also been reports of mass job cuts by various companies across the globe. As per a PTI report, Indian IT sector is facing challenges in the business environment and stricter work permit regime in countries like the US, Singapore, Australia and New Zealand. The IT firms are also under pressure to hire local workers instead of taking Indian employees on work visas to client sites as the US hardens its stance on outsourcing.