More than 1,000 forced redundancies at AOL
Wednesday 13 January 2010 | By Heidi Scott, Gosh! Media Copywriter
Internet company AOL has announced that it is implementing involuntary redundancy for over 1,000 employees and shutting many of its European offices.
The dramatic news comes after AOL's voluntary redundancy scheme – announced in November and which aimed to cut a third of its worldwide workforce – fell far short of its target. The UK operation will see a reduction in staff numbers that AOL described as "significant".
Before the restructuring, the company had approximately 6,900 employees, of whom about 4,500 were in the US. Back in November, AOL's CEO, Tim Armstrong, revealed that the company needed 2,500 voluntary redundancies across the globe but a mere 1,100 volunteers came forward, so AOL is now having to fire over 1,000 employees.
The company – which was spun off from its former parent, Time Warner, in December – will close a number of offices, beginning with those in Spain and Sweden. Four German offices – Hamburg, Düsseldorf, Frankfurt and Munich – will also be shut and the Paris office may also face the axe.
The AOL spokesman said that successful operations – such as the advertising business, AdTech – would continue to have a physical presence in Europe. In the USA, lay-offs were expected to take place today, Wednesday 13 January. "For many of the employees impacted in the USA Wednesday will be their last day in the office," the company said. AOL is also closing the doors of its Seattle office, which has been home to some of its mobile operations, with the mobile division being centralised in California.
In a statement, an AOL spokesman said, "We will be significantly reducing our UK staff, but will continue to have a robust advertising operation as well as a consumer offering. Ireland will remain a core technology development centre for the company. Both the UK and Ireland were part of the voluntary separation programme we ran late last year. Regarding Bebo, it continues to be part of AOL Ventures."
According to industry expert Peter Kafka, writing in his blog on the website All Things Digital, "AOL hasn't released a breakdown of cuts by territory or by department. But I'm told that the company's editorial/content production staff, which Armstrong and his lieutenants have been emphasizing as a priority in recent months, will not remain untouched."
In his blog, Marketing Pilgrim's Frank Reed speculates that this means increased outsourcing of content production, saying, "…if your strategy moving forward is creating more and more content then taking away part of that internal team just means it's likely cheaper to outsource."
Explaining the cuts, AOL's statement said, "As you know from covering the company, since April, we have been moving through a process that started with strategy, then focused on structure, and has most recently been centered on aligning our costs with the company's strategy and structure. As a part of this process, we've looked at every aspect of this business. We evaluated our competitive position and product portfolio in every market – and we asked the hard questions about areas that were no longer core to the strategy and our profit profiles in the businesses and countries where we operate…All of our cost alignment work is about ensuring AOL's sustainability and future success."
