OpenText announces global office closures, workforce reductions

Remote work will become permanent for some employees as company institutes ‘decisive and clear’ pandemic response and cuts up to 5% of employees

WATERLOO — Software firm OpenText is permanently closing about half of its offices and shedding up to five per cent of its workforce as it responds to the COVID-19 pandemic.

"We believe it is better to be decisive and clear, not slow and incremental," chief executive officer Mark J. Barrenechea said during an earnings call on Thursday afternoon.

A shift to remote work by more than 95 per cent of OpenText

employees as the pandemic spread has been "amazingly productive" and, as a result, approximately half of its physical offices around the world will not reopen, Barrenechea said.

Those offices are smaller and house about 15 per cent of OpenText’s total workforce, which was approaching 15,000 employees in 35 countries earlier this year. Specific locations weren’t identified in a release announcing the move, but a spokesperson confirmed that its offices in Waterloo — the company’s headquarters — and Toronto are remaining and will reopen to employees when a return to work is possible.

"Our corporate offices, our centers of excellence, innovation centers and country head offices will reopen when we are able to do so," the company said.

About 2,000 employees at the affected offices will move permanently to remote work. Separately, a restructuring program will see the total workforce cut by up to five per cent, or roughly 750 people. Cost savings once restructuring is complete are expected to be in the $65 million to $75 million (U.S.) range.

A number of temporary costsaving measures are also being taken, include reduced discretionary spending and temporary salary reductions.

"We are being pre-emptive with our choices," Barrenechea said. "You’ve just got to prepare to weather the challenges."

OpenText reported 13.3 per cent growth in total third-quarter revenues year-over-year, to $814.7 million (U.S.), and ended the quarter with $1.45 billion in cash. But Barrenechea said the pandemic is expected to slow 2020 revenue growth to the mid to high single digits. "Before COVID we expected higher growth.”

OpenText specializes in enterprise information management software, which works to manage and optimize the use of information within large companies and government agencies.

Much of its focus in recent years has been on cloud computing, with many high-priced acquisitions focused on that market; OpenText has spent more than $4.5 billion (U.S.) in recent years on acquisitions. On Thursday, the company said the pandemic is accelerating a need to digitize and move to the cloud for many companies as they look to a contactless approach.