Workday wants AI to punch in instead of having to hire new recruits
SaaS
CEO eyes margin gains by keeping headcount flat – bold for a company selling HR software to employers
Workday is hoping to boost its revenue
and margins by using AI agents instead of hiring
people, according to its CEO. After announcing revenue growth, Aneel Bhusri – the company co-founder who was
reinstated as CEO in February – said his aspiration is to keep headcount
the same while sustaining growth and increasing margins by harnessing AI."I'd love to see us continue the growth
that we had in Q1, but keep headcount as close to flat for the year as possible
because we are getting the benefits of using our own products and other AI
tools. That's where I'm hopeful and believe that we're going to have additional
margin expansion as we get those benefits. That's different than what my view
was coming in three months ago."
In its Q1 results ended April 30, Workday recorded net profit of $222 million versus $68 million in the prior year, when the bottom line was hit by restructuring expenses. Revenue generated for the three months was $2.54 billion, up 13.5 percent year-on-year.
The results beat market expectations and Workday forecast higher margins for the rest of the year, sending its share price up 10 percent in
after-hours trading. Bhusri's aspiration to keep headcount flat
while increasing revenue and margins follows a roller-coaster ride of public statements on employment
plans.In February 2025, Workday announced
an 8.5 percent cut to its global workforce – 1,750 positions – as it "intended to prioritize its investments and continue advancing Workday’s ongoing focus on durable growth," an SEC
filing said.
In June 2025, CFO Zane
Rowe told an investment conference that the SaaS biz planned to rehire the same number
of people, although with different roles. "We will be hiring back. We wanted to
make sure everyone understood that this is not us reducing," he said.Nonetheless, in September 2025, then CEO
Carl Eschenbach seemingly reversed the plan, telling investors it was "consolidating
and streamlining the organization model" and did not "need more
headcount to drive the business forward."By February 2026, Eschenbach was out the door
as Workday said it would lay off about 2 percent of its staff in a bid to
align with its "highest priorities."Shareholders may be delighted that Workday
can now expand without having to increase the size of its workforce. But for a company that
relies on organizations hiring people to create demand for its HR software, it seems like a strange example to set. ®
