What Happened

Workday announced a workforce reduction of approximately 500 employees, or 2.5% of its workforce, on September 29, 2026. The cuts are concentrated in product and technology teams, marking the company's second layoff round this year after February's reduction of about 400 employees.

The company expects restructuring charges between $65 million and $80 million, with $55–70 million hitting the fiscal third quarter. Workday also reduced selected leased office space as part of the organizational changes.

Who Is Affected

The layoffs primarily affect product and technology roles, a shift from February's cuts which targeted customer operations and other non-revenue-generating functions. Workday employed more than 21,000 people at January's fiscal year-end, so the impact is broad across engineering and product teams.

Employee-related restructuring actions are expected to reach substantial completion during the first quarter of fiscal 2028, subject to local requirements.

Market Impact

Workday's restructuring will pressure its GAAP operating margin in the fiscal third quarter, which is expected to be approximately 20–21 percentage points below its non-GAAP margin. The company kept its broader fiscal 2027 revenue and non-GAAP operating margin guidance unchanged.

• Workday plans to continue hiring in key strategic areas and locations during fiscal 2027, indicating a targeted workforce shift rather than a freeze.
• The enterprise software market faces investor concerns about AI's impact on demand, though Workday has not cited AI as a reason for the cuts.

What to Watch

Monitor Workday's strategic hiring areas and any tooling or talent gaps that emerge from the product and tech reductions. The company's co-founder Aneel Bhusri has defended its position against startups and internal builds, but the restructuring may create openings for vendors offering HR, talent, dev productivity, or change-management solutions.

Also watch for further restructuring actions as Workday progresses through fiscal 2027, and whether the company adjusts its guidance in upcoming earnings calls.

Related coverage

• Workday Q1 FY2027: Agentic AI ARR Nears $500M, New ACV Growth Hits 5-Year High
• Oracle cuts 546 cloud jobs, shifts workforce to AI infrastructure
• Oracle layoffs: Workers over 40 bear the brunt of job cuts in cloud division
• Oracle Cloud Infrastructure layoffs hit 546 employees in latest round