In an SEC filing today, Rackspace disclosed that 85% of the positions being cut will be backfilled by workers in “offshore service centers.” That’ll be where wages are lower and labor laws more lax, presumably. Apollo Global Management owns the largest block of stocks suggesting they are driving the changes.
Rackspace employs 7,200 globally, and told the SEC it was dumping approximately one in ten employees, informing them of the changes on July 22.
Most likely the positions will be filled by lower cost staff in Bangalore in India. Bangalore has been a growing location of many corporations who seek to reduce costs. Cloud ventures are profitable but there is a lot of work that can be globalized.