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GoCardless, a UK payment firm backed by Alphabet, has plans to cut 15% of its workforce. The company currently employs around 600 people and has been somewhat affected by the pandemic's impact on small businesses. GoCardless CEO, Hiroki Takeuchi attributed this move to the pandemic's impact, and subsequent lockdowns, resulting in the loss of several notable customer accounts. The firm has been successful in the past raising funds with backing from large companies like Alphabet but has recently faced increased competition from rival firms in the same space. While the move is unwelcome news for the workers impacted, the company remains positive, suggesting this restructuring will enable it to maintain strength as it continues to pursue its goal of pushing toward profitability.The announcement of layoffs by GoCardless, the UK-based payment firm, has triggered several reactions. The company plans to cut its workforce by 15%, making redundant about 90 employees. The layoffs are reportedly part of GoCardless’ plan to reduce operational costs, boost productivity, and enhance profitability.
GoCardless, which counts Alphabet among its investors, is a fast-growing Fintech firm with a presence in several countries, including the UK, Germany, Australia, and the US. The firm offers an online direct debit platform, enabling businesses small and large to receive payments via online bank transfers.
However, the company has not been immune to the pandemic’s effects on the global economy, particularly in terms of reduced business activity and lower transactions by small businesses. GoCardless has reportedly faced increased competition from other payment providers operating in the same space. This situation forced the company to double down and focus on revamping its core operations, reducing its staff size, and boosting internal efficiency.
CEO Hiroki Takeuchi affirmatively says that the decision to reduce employee numbers is indeed a tough decision that was ultimately driven by economic challenges characterizing the past 12-18 months. Despite the disruption caused by the pandemic, Takeuchi notes that with the payment firm already strong prior to the pandemic, the goal remains to maintain strength and competitiveness as the firm continues to pursue profitability.
The GoCardless layoffs trigger concerns primarily for the affected employees, but the firm's decision could have broader implications on the fintech sector, particularly in the UK. The pandemic has significantly impacted businesses, and fintech companies face stiff competition from other providers aiming to transform the payments industry.
This move by GoCardless signifies that companies in the fintech sector must take a more strategic approach to improve their bottom line and protect their business against rival disruption. By refocusing resources, increasing efficiency, and lowering operational costs, companies, and startups in the fintech industry can allocate resources toward developing innovative solutions and expanding their reach.
Although unsettling for impacted employees, this move is a necessary restructuring exercise to secure GoCardless's future financial viability, competitiveness, and operations. With increased competition, businesses that trim their workforce and optimize internal processes stand to emerge stronger with more sustainable business models. Consequently, organizations in the fintech sector can sustain long-term growth to support job creation, strengthen individual economies, and power globalisation.
Article First Published at: https://www.cnbc.com/2023/06/13/alphabet-backed-uk-payment-firm-gocardless-to-cut-15percent-of-headcount.html