GitHub and GitLab announce job cuts

GitHub and GitLab announce job cuts

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Microsoft Corp.’s GitHub unit and publicly traded rival GitLab Inc. today both announced layoffs, disclosing plans to let go 10% and 7% of their respective workforces. 

Neither company specified the exact number of affected employees. GitHub had 2,500 staffers as of April 2021 and added more than 1,000 new employees last year, which suggests the layoffs could potentially affect over 300 workers. The job cuts at GitLab, in turn, are estimated to impact about 114 employees.

GitHub operates a platform that software teams use to store the source code of their applications. The platform also hosts a significant percentage of the world’s open-source projects. GitHub operated as an independent company until 2018, when it was acquired by Microsoft Corp. for $7.5 billion.

GitHub has significantly expanded its focus since the acquisition. Alongside its core code hosting features, the Microsoft unit now offers a variety of other tools designed to ease developers’ work. Those tools can detect software vulnerabilities, automate the deployment of application updates and generate code using artificial intelligence.

Last October, Microsoft disclosed that GitHub’s user base has increased from 28 million developers at the time of the acquisition to over 90 million. In the same time frame, its annual recurring revenue increased to more than $1 billion. Prior to the acquisition, GitHub reportedly generated annual recurring revenues of between $200 million and $300 million.

Fortune reported today that the layoffs at GitHub are part of a broader cost-cutting initiative. The code hosting provider will also close its offices and shift to remote work. The development comes a few weeks after GitHub parent Microsoft announced plans to let go 10,000 employees, or about 5% of its workforce. 

“We announced a number of difficult but necessary decisions and budgetary realignments to both protect the health of our business in the short term and grant us the capacity to invest in our long-term strategy moving forward,” GitHub said in a statement. 

GitHub rival GitLab also disclosed its workforce reduction plans this morning. In a memo to employees, Sid Sijbrandij stated that “I had hoped reprioritizing our spending would be enough to withstand the growing global economic downturn. Unfortunately, we need to take further steps and match our pace of spending with our commitment to responsible growth.”

GitLab provides a development platform of the same name that competes with GitHub. The platform includes code hosting features similar to those offered by the Microsoft unit, as well as a range of other tools. GitLab can help software teams with tasks such as detecting code vulnerabilities, releasing software updates to production and troubleshooting application malfunctions.

GitLab listed its shares on the Nasdaq in a 2021 public offering that raised about $650 million. The company is not yet profitable. In its most recent quarterly earnings report, GitLab posted a loss before certain costs such as stock compensation of 10 cents per share on $113 million in revenue. 

In today’s blog post, Sijbrandij wrote that employees impacted by the layoffs will receive pay through the transition period, four months of severance pay and up to six months of healthcare coverage. Additionally, GitLab will offer outplacement support through a third-party provider. 

Image: Unsplash

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