Nike lays off technical staff and outsources tasks
Nike recently confirmed layoffs within its technology division, choosing to outsource some responsibilities to outside vendors. The company has not publicly disclosed how many employees will be affected. These layoffs follow a larger restructuring in February in which Nike cut about 1,600 jobs, mostly for executive positions in technology and marketing.
This move to cut costs comes after Nike lowered its sales projections and announced plans to cut $2 billion in costs over the next three years. This decision was prompted by falling stock prices, which fell 13% year-on-year. Nike’s shift to relying on external suppliers for technology functions represents a change in its approach to internal technical capabilities, favouring external partnerships over internal development.
These restructuring efforts coincide with recent leadership changes, including the appointment of a new president and CEO, Elliott Hill, in October to address innovation challenges and competition from more agile rivals.
Nike’s technology division has faced documented problems for years, as evidenced by an employee survey conducted in 2022 that found widespread dissatisfaction and burnout. The survey highlighted concerns about trust in leadership and work-life balance, leading many employees to consider leaving the company.
Previous reorganisations within the technology division had already caused confusion and instability among employees, who expressed dissatisfaction with Nike’s return policy and wanted more flexibility. Nike’s former CEO John Donahoe publicly acknowledged these challenges, citing “employee fatigue and productivity” as concerns. This suggests that Nike has been struggling with its technology strategy for some time.
In addition to technology, Nike’s commitment to other strategic initiatives, such as sustainability, has also been affected by recent budget cuts. The company’s sustainability team faced proportionately larger cuts, about 20% compared to the overall reduction of 2%. These targeted cuts disproportionately affected senior leadership positions, with nearly half of the 700 jobs lost in Oregon being vice presidents or senior directors.
Nike faces challenges in meeting its sustainability goals, with reported emissions increases since 2015. This reflects broader challenges within the apparel industry, which may cause many companies to reconsider their commitments.
At the end of the trading day on Monday, Nike shares closed 1.63% lower on the Dow Jones stock exchange, but partially recovered in after-hours trading.
While Nike is adjusting its strategic focus amid changing market dynamics and internal pressures, the latest round of layoffs highlights the company’s efforts to streamline operations and prioritise immediate financial performance. The long-term impact of these organisational changes remains uncertain, but investors and analysts will be watching closely in the coming months to see how Nike balances innovation, sustainability and profitability.
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