Mastercard is the latest to turn to layoffs as it kickstarts its reorganization efforts to recenter its sights on its core business. The latest reports suggest that Mastercard will cut 3% of its workforce, and affected employees will be informed by September 30. News of Mastercard’s workforce reduction plans comes after the company unveiled its Q2 results. The company’s performance exceeded expectations, but its operating expenses were also higher than expected. To set things back in order and rebalance their finances, the New York-based company has discussed a one-time restructuring cost of $190 million USD for the third quarter.
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Mastercard Layoffs To Impact 3% of Its Workforce
Mastercard employs approximately 33,400 employees globally and the 3% cut to the workforce is expected to affect around 1,000 workers. According to the company’s annual filings, 67% of this workforce is located outside the U.S., spread across 80 different countries. The business has approximately 4,600 contractors who supplement the Mastercard employee base in order to meet specific needs but the layoffs are tied to the full-time employees who work for the organization.
The payment network processor’s voluntary workforce turnover at the end of December 2023 stood at around 5% and the total cost of the workforce ended at $6.0 billion USD. These costs should come down over time if the layoff plans are successful after the initial severance pay expenses.
The Mastercard employee reduction and restructuring plans came after the Q2 results, which showed net revenue increases of 11% to $7 billion USD and a net income of $3.3 billion USD. The company’s operating expenses increased 12%, a rise which has been attributed to higher general and administrative expenses and litigation provisions.
Mastercard’s layoffs haven’t been directly linked to any particular employee expenses or problems within the workforce, but the company is looking at increasing its investment in a wider range of technology and redeploying resources in the coming months for which it needs to free up resources.
“As these changes are made, we plan to redeploy resources into growth areas. Some of these include opening acceptance in new verticals and continuing to apply technology in ways that help us realize even more of the shift to digital across both consumer and commercial,” the company stated. “We’ll also enhance and expand our Value-Added Services, such as in data analytics, fraud, and cyber security, particularly as we further embed AI into our products and services.”
The company has not revealed which departments will be affected, nor do we have any reports on whether the job cuts will be centered in the U.S. The Mastercard layoffs are expected to occur globally until we hear specific details from the organization. The company has confirmed its plans to offer support to the employees affected by the layoffs, but there has been no further information on the exact nature and extent of the support.
Mastercard Staff Reduction Plans Are Not the Only Instance of Layoffs Across Industries
Audio equipment manufacturing company Sonos recently announced plans to lay off employees after some trouble with the latest version of their smartphone app. Despite the popularity of its products and two more releases queued up for its audience, the company is stuck in a hard place, unable to meet the expectations of its audience. Chipmakers Intel and Infineon have both announced job cuts after unsatisfactory revenue reports.
Mastercard competitor Capital One has not announced any layoffs this year but it had turned to job cuts back in 2023, where 1,100 employees were let go. Credit card firm Discover cut around 108 jobs earlier in February this year. Employees across industries have their fingers crossed that this trend of layoffs will come to an end soon, but it is unlikely that the trend will wind down this year.
