PayPal will cut nearly 3 percent of its workforce as president David Marcus looks to speed up product development
Paypal is to cut about 325 full-time jobs as part of a major restructuring intended to make the company more “agile” and attract a higher level of engineering talent.
The cuts, which also affect about 120 contractors located around the world, come at a time when PayPal remains the leading online payment processor and continues to show strong growth. But in Silicon Valley PayPal’s development culture is seen as slow-moving, making it difficult for the company to attract the designers and engineers necessary to keep up with competitors, according to some industry observers.
The reorganisation is intended to address that problem by combining nine product groups into a single division, according to PayPal president David Marcus. The new single-product development group will be headed by Hill Ferguson, who takes on the role of head of global product, and chief technology officer James Barrese.
“Instead of being organised around projects, our teams will now be dedicated to products and focused on our customers – consumers, developers, small businesses and large retailers,” Marcus wrote in a blog post.
The cuts affect nearly three percent of PayPal’s workforce of about 13,000, with parent company eBay to take a $15 million (£9.3m) restructuring charge in the fourth quarter related to the layoffs. The job reductions will mainly affect PayPal’s technology and product organisation.
For the quarter ending in September, PayPal had more than 117 million active registered accounts, up 14 percent from the same quarter a year earlier. eBay’s payments division, which also includes Bill Me Later and Zong, recorded net revenue of $1.26bn for the quarter, up 23 percent from the same quarter a year earlier.
Marcus, who formerly headed mobile payments start-up Zong, joined PayPal when the company acquired the firm last year, and has served as PayPal’s president for the past seven months.
PayPal faces increasing competition from the likes of mobile payment processor Square, online payment company Stripe or Dwolla, which handles both online and mobile payments.
Marcus said the reorganisation is designed to reduce the time it takes for PayPal to develop and launch new products. The new approach will allow smaller groups of engineers and designers to quickly join together and release test versions of products that will be rapidly updated and improved, he said in an interview with Reuters.
PayPal Here, a recently-launched credit card processing service for small merchants, is serving as the model for PayPal’s upcoming product development, Ferguson told Reuters. That product was initially launched by a group consisting of one product developer, two engineers and two designers.
PayPal is also working on changes to the company’s core online payment processing service, Marcus said. The company wants to eliminate the current process under which users are obliged to pass from a merchant’s site to PayPal’s website to complete each purchase.
A Bloomberg report had predicted the job cuts earlier this month.
In July, PayPal acquired startup card.io, whose technology allows credit card details to be entered via a smartphone’s camera.
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