Workday filed a Form 8-K with the Securities and Exchange Commission on September 29 saying it will cut about 2.5% of its workforce, or roughly 525 jobs, with the reductions concentrated in its Product and Technology team. It is the second time in 2026 the enterprise software company has shrunk its headcount, and it comes as cofounder Aneel Bhusri, back in the chief executive seat, works to convince Wall Street that AI has not made Workday's products less necessary for buyers.
- Filing date
- September 29, 2026 (Form 8-K)
- Workforce reduction
- Approximately 2.5% of total workforce (~525 of 21,000+)
- Affected teams
- Primarily Product and Technology, plus select leased office space reductions
- Total charges
- $65M-$80M ($55M-$70M in Q3 FY27, $10M in Q4 FY27)
- Cash severance & benefits
- $40M-$55M
- Non-cash stock-based compensation
- $10M
- Non-cash leased office impairment
- $15M
- GAAP vs non-GAAP margin gap
- 20-21pp in Q3 FY27; 19pp for full FY27
- Prior 2026 round
- About 400 employees (~2%) in February, mostly Global Customer Operations
- CEO change in 2026
- Carl Eschenbach departed; cofounder Aneel Bhusri returned as CEO (Bhusri previously held the role three times)
- Q3 earnings release
- November 27
- Completion timeline
- Employee actions by Q1 FY28; office actions by Q4 FY27
The 2.5% cut Workday filed on Tuesday
Workday filed a Form 8-K with the Securities and Exchange Commission on the afternoon of September 29 saying certain functions within the company had begun reorganizations designed to better align team structures with the company's strategic growth priorities. The filing said the actions include a reduction of approximately 2.5% of Workday's current workforce, primarily within its Product and Technology team, plus select leased office space reductions.
Workday had a global headcount of a little over 21,000 at the end of January, according to its last annual filing, which puts the cut at roughly 525 employees. The company told the SEC it plans to continue hiring in key strategic areas and locations throughout fiscal 2027, even as it shrinks the team that builds and ships the software.
What the $65 million to $80 million pays for
The filing broke down the cost of the cut into roughly $65 million to $80 million in total charges, with $55 million to $70 million expected to land in the third quarter of fiscal 2027 and another $10 million in the fourth quarter. About $40 million to $55 million of that is cash for severance payments, employee benefits and related costs, the company said. Another $10 million is a non-cash charge for stock-based compensation, and roughly $15 million is a non-cash impairment tied to the office space Workday is leaving behind.
Because of those charges, Workday now expects its third-quarter GAAP operating margin to come in about 20 to 21 percentage points lower than its non-GAAP operating margin, and its full fiscal 2027 GAAP margin to land about 19 percentage points below the non-GAAP version. Workday is scheduled to report its third-quarter results on November 27.
A second 2026 round, and a different team this time
This is Workday's second workforce reduction in calendar 2026. In early February the company cut about 2% of its employees, primarily within its Global Customer Operations team, according to Seeking Alpha. About a week after that announcement then-CEO Carl Eschenbach left the company, and cofounder and longtime executive chair Aneel Bhusri returned to the chief executive seat, a role he had previously held three times.
The September cut is shaped differently from the February one. The earlier reduction landed mostly in the customer-facing operations organization that supports existing accounts. This one lands primarily inside the group responsible for building and shipping the software, which is where AI tooling is starting to do some of the work that junior engineers used to handle.
Why Workday is still hiring in strategic areas
Neither the February nor the September filing cited artificial intelligence as the reason for the cuts, but the timing lines up with the so-called SaaSpocalypse that has weighed on enterprise software stocks since the spring. Investors have worried that AI makes it cheaper for customers to build their own software than to buy it, and that has pressured Workday alongside the rest of the sector.
Bhusri pushed back on that narrative during Workday's August earnings call. Last quarter, he told analysts, he had not met a single customer looking to replace Workday with something they are building internally or buying from a startup, and one quarter later that has not changed. The decision to reduce the broader product and technology group while continuing to hire in select strategic areas is the operational expression of that stance: keep the people building the core platform lean, but keep adding to the small teams working on the parts of the product that customers will pay more for.
What happens next
Workday told the SEC it expects the employee-related actions to be substantially completed by the first quarter of fiscal 2028, subject to local law and consultation requirements, and the office-space actions to be substantially completed by the fourth quarter of fiscal 2027. The full cost estimates in the filing remain subject to assumptions about local law in different jurisdictions, and actual amounts could differ materially.
Investors will get the first hard numbers on November 27, when Workday reports its third-quarter results. Until then the 8-K is the company's most concrete statement yet about how it is choosing to spend the demand pullback its investors keep pricing in.
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