Five9 has confirmed that it has cut four percent of its workforce in a statement to CX Today.
By doing so, the company will have lowered its headcount by approximately 120 employees.
As of December 2024, Five9 employed 3,073 people.
The news comes after the cloud contact center stalwart announced a round of layoffs in August 2024, which impacted seven percent of its team.
Before that first round of layoffs, Five9 had never made a large-scale workforce reduction.
Commenting on the latest move, a Five9 spokesperson stated: “As part of our ongoing efforts to align our business with strategic priorities, we recently made the difficult but necessary decision to restructure certain areas of our organization.
This decision was not made lightly, and we extend our gratitude to all impacted employees for their contributions and dedication during their time at Five9.
“We are proactively working to support those affected during this transition and remain focused on our long-term vision and the continued success of our employees, customers, partners, and stakeholders,” concluded the spokesperson.
Despite the layoffs, Five9 reported another quarter of double-digital growth last quarter, raising its revenues by 17 percent year-over-year (YoY). That’s no mean feat in a crowded market.
Nevertheless, its stock is down by over 60 percent year-to-date (YTD).
Moreover, over the past 12 months, activist investors have called for change.
In July, Anson Funds allegedly urged Five9 to sell up, according to sources from Reuters.
Meanwhile, in October, Legion Partners increased its stake in the business and allegedly pushed for a board seat and cost-cutting measures.
Legion Partners has not yet been granted that seat. However, Anson Funds did secure a position on the company’s Board of Directors in December.
As such, while it is only speculation, these layoffs could later be attributed to driving “shareholder value”, like its previous round.
However, Five9’s layoffs are far from an isolated incident in the contact center space.
Earlier this year, industry stalwart Avaya made global layoffs, reportedly restructuring its business around its biggest 1,500 enterprise customers.
Sprinklr also endured layoffs in February, slashing 15 percent of its staff.
Other prominent players in the space, including Cisco, Talkdesk, and Twilio, have also announced job cuts over the past 18 months.
What’s Going on In the Contact Center Market?
One word: AI. The technology promises to reshape customer service operations.
Indeed, Zomato, Zalando, and Sky made headlines in recent weeks by announcing workforce reductions, with the latter two pointing the finger squarely at AI.
Even Salesforce – perhaps the biggest name in the customer experience space – revealed it was letting service agents go as it deployed AI across its own business.
Given these seat reductions, some investors are worried, acknowledging that many contact center providers still charge per seat.
So, as AI – across many organizations – begins to eliminate seats, some vendors appear to have made a rod for their own backs.
Of course, many are coming up with new pricing schemes. For instance, Zendesk is charging on resolutions, while Genesys has a tokenization strategy.
Nevertheless, there is no clear-cut “best” strategy here.
There’s also another risk: hyperscalers. AWS already has a big presence in the cloud contact center market. Microsoft and Google are building out their portfolios, too.
As these juggernauts expand, there’s perhaps a risk to more traditional providers in the space.
Indeed, hyperscalers can leverage first-party AI to accelerate innovation in the space. They may also risk lower profit margins and charge less, with the overarching goal of pulling enterprise customers onto their clouds.
As these hyperscalers challenge the likes of Five9 at the contact center market’s forefront, they threaten to suck more air out of the space.
For smaller vendors, the best chances of success may lie in specialization, whether in serving a specific sector or industry segment (i.e., SMBs or the midmarket).
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