Last Wednesday, Zendesk concluded the month by announcing the reduction of roughly eight percent of its workforce due to macroeconomic factors and an “increasingly competitive marketplace.”
According to Zendesk’s CEO Tom Eggemeier, the firm tried to avoid reduction by improving its macroeconomic conditions and streamlining costs. However, the CEO explained that these factors “have not improved.”
Moreover, the CEO noted that due to changes in customer expectations, thanks to the emergence of technology like generative AI, Zendesk’s clients are undergoing “massive shifts” in their approach to work.
In response, Zendesk is sharpening its content offerings to provide new products and value to its customers. Moreover, Zendesk is looking to direct its talent and resources to match its current priorities and client expectations.
In a blog post, Tom Eggemeier added:
Looking ahead, I believe we have an incredible opportunity to lead the new era of intelligent CX. The new solutions we introduced at Relate – Zendesk AI and Conversational Commerce – will help our customers transform the way they do business.
Zendesk is helping its ex-employees with a severance support plan to assist with locational and business shifts.
Is Zendesk’s Fate Held by AI
Last week’s layoffs may have been sealed by Zendesk movements late the previous year, which saw many experts question its single-product integration of AI technology.
Last year, Zendesk introduced Intelligent Triage and Smart Assist to its platform to provide clients with automated customer support and data analytics tools.
In a busy market, many Zendesk competitors, such as Salesforce and Microsoft, provide clients with highly adaptable, multi-platform CX services that offer greater value than single-platform solutions.
In August, ahead of Zendesk’s Intelligent Triage and Smart Assist launch, Zeus Kerravala, Founder and Principal Analyst at ZK Research, noted:
If you look at every software company that became really big – such as a Salesforce, Oracle, or Microsoft – they all have one thing in common: they made that shift to platform. They allowed others to build products on top of theirs. They found a way to be more than just one product. Zendesk was working on that, but they couldn’t execute.
While some observers have conflicting opinions on Zendesk’s single platform offerings, Zendesk is confident its AI integrations can provide significant value to clients.
During Zendesk’s AI product launch, Adrian McDermott, the Chief Technology Officer of Zendesk, explained that with AI, the firm could deliver an easy-to-set-up tool that can “streamline business operations without needing dedicated developers or an expensive implementation. “
Moreover, the CTO said that Zendesk’s approach helps CX teams lower the burden via pre-trained AI/ML integrations “that do more, faster, and with less guesswork involved”.
In addition to its workforce reductions, Zendesk also faced turmoil last year, recording a $95 million loss in Q2 2022. Zendesk can still turn things around with the correct re-focus and reorganization methodologies that Tom Eggemeier outlined last week.
