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Layoffs mount as cybersecurity vendors hunker down
Cybersecurity firms Snyk and Cybereason separately announced significant layoffs during the last week of October, cutting their workforces by 198 and 200 workers and representing 14% and 17% of their workforces, respectively.
The two companies are the latest cybersecurity vendors to join a growing list of more than three dozen firms to pare their workforces in the past six months, as the global economy continues to flash signs of a slowdown and possible recession. On Oct. 24, for example, Snyk CEO Peter McKay announced that, while the developer security firm continues to grow, the company “must operate even more efficiently in order for Snyk to effectively withstand the continued headwinds facing the global economy.”
Cybereason CEO and co-founder Lior Div also claimed strong operations but stressed its need to move away from aggressive investments in research and development, sales, and marketing and instead focus on customer retention and innovating in its core market of extended detection and response (XDR).
“While we are making significant traction in these areas and our growth remains strong, we are seeing significant volatility in the global financial markets that require us to prioritize profitability over growth,” he said in an Oct.26 blog post.
Industrywide Layoffs Loom
Snyk and Cybereason are not alone. In June, privacy and security firm OneTrust announced it would lay off 950 employees, or 25% of its workforce. In late May, cloud security firm Lacework announced it would layoff approximately 300 workers, or 20% of its head count. Last week, cybersecurity automation firm Forescout announced it would be cutting costs but did not release the specific number of layoffs, instead saying the company intended to “optimize our cost base to prepare for difficult economic times over the next period to ensure the future success.”
In total, 32 cybersecurity firms have announced layoffs or restructuring since early May, according to layoff tracking site Layoffs.FYI, most citing the tightening market and need to protect the longevity of the business.
“While we do not have control of the environment around us, we do have a responsibility to control how we operate our business and make changes as needed to best position the company for continued and long-term success,” Jay Parikh, CEO of Lacework, said in a May update. “We have adjusted our plan to increase our cash runway through to profitability and significantly strengthened our balance sheet so we can be more opportunistic around investment opportunities and weather uncertainty in the macro environment.”
Investments Become Scarcer
Cybersecurity vendors’ retrenchment is not without cause. The vast majority (83%) of companies expect to contend with a recession in 2023, and most of those businesses are taking steps to prepare, according to the “2023 State of IT” report. IT budgets will likely stagnate: While half of businesses (51%) expect to increase IT budgets in 2023, a significant portion of those increases are due to inflation, not expanding purchases and services, the report stated.
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