Stripe, the parent company of Nigerian payment company Paystack, has announced that it will lay off 14% of its workforce, which is about 1000 workers under the company’s payroll.
According to the company’s CEO, Patrick Collison, the layoff comes from the company repositioning itself to accommodate macroeconomic factors that have become peculiar to developed markets globally.
These macroeconomic factors include inflationary tendencies, energy shocks, higher interest rates, reduced investment budgets, and shrinking startup funding.
“Doing right by our users and our shareholders (including you) means embracing reality as it is. Today, that means building differently for leaner times. We have always taken pride in being a capital-efficient business and we think this attribute is important to preserve. To adapt ourselves appropriately for the world we’re headed into, we need to reduce our costs,”Patrick Collison, Stripe’s CEO
Stripe joins a growing number of big tech companies that have laid off a portion of their staff this past few months to reduce operational costs caused by rising inflation in major parts of the world.
This week alone, Twitter, Lyft, CloudKitchens, OpenDoor, Chime, Dapper Labs, Gem, MessageBird, and Kry have laid off staff or announced plans. Apple also announced that it plans to freeze hiring until the middle of next year.
Layoffs.fyi estimated that 3,572 jobs have already been cut in November.
Will Stripe’s layoff affect Paystack?
After announcing the acquisition of Paystack in October 2020, the US fintech giant has subsequently allowed it to function practically independently.
At press time, we cannot confirm if Stripe’s reported layoff will be extended to the Nigerian subsidiary, given similar macroeconomic conditions currently affects the Nigerian market.
Nigerian firms like 54gene and Kuda are among the companies that have let some of their staff go. While employees at Quidax, Eden Life, and GetEquity are reportedly also seeing compensation reductions.
Since the Pandemic in 2020, Tech companies globally have been experiencing a hit in revenue and investment. Hence, the reduction in staff and wages.
According to the CEO, the company made two mistakes that should be corrected. Collins stated that Stripe overestimated the possibility and severity of a broader recession and grew overly confident about the internet economy’s near-term growth in 2022 and 2023..
Also, Collison says the company grew operating costs too quickly.
“Buoyed by the success we’re seeing in some of the areas of our new product, we allowed coordination costs to grow and operational inefficiencies to seep in,” he noted in the memo.
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