In the Serbian IT community, the main topic these days is developer layoffs that have spread from abroad to our market.
The Danish company Better Collective, and previously Playstudios Europe, have laid off hundreds of employees due to a decline in their stock market performance. These layoffs have also affected some of their employees in Serbia.
Layoffs Revealed on LinkedIn
News of Better Collective, which has its Serbian headquarters in Niš, laying off numerous employees first spread on LinkedIn yesterday. A Serbian employee posted: “To all colleagues who lost their jobs at Better Collective today, myself included, I offer free career counselling services if they need help finding a new job.”
One post after another followed throughout the day, including a statement from the company’s CEO and founder, Jesper Søgaard, titled “Some Emotional Days for Better Collective.”
Poor Performance Causes 40% Drop in Shares
Recalling the company’s founding in 2004 and its growth, Søgaard explained that the decision to “part ways with some colleagues was not made lightly, as each has played a role in shaping Better Collective into what it is today.” However, he added, the decision was unavoidable due to worse-than-expected performance, especially because of changes in the U.S. market and a continued slowdown in commercial activities in Brazil in anticipation of upcoming regulations. These poor results, which were reported in the financial statement, led to a 42% drop in the company’s share price, according to Blic Biznis.
Better Collective has issued a revised forecast for its financial performance in 2024, adjusting revenue and earnings expectations after slower-than-expected activities in key markets. The company now forecasts revenue between €355 million and €375 million for fiscal year 2024, down from the previous estimate of €395 million to €425 million.
IT Consultant: Layoffs Were Expected
The exact number of layoffs has not been disclosed to journalists, but unofficially, eKapija reports that layoffs in both companies amount to several hundred employees in Serbia.
According to Nikola Pejović, an eKapija source and consultant at LeanFinance, this situation is not surprising: “What’s happening now is very common for publicly traded companies, and Better Collective is listed on the Danish and Frankfurt stock exchanges. After the last quarter, they had to revise their projections as things weren’t looking good, and they had to inform shareholders that profits would be lower than expected. In such situations, management is under great pressure to cut costs, and in IT companies, salaries make up as much as 80% of expenses.”
We’re No Longer the Cheapest Workforce
In his view, this is neither the first nor the last instance of such cuts. Pejović also pointed out a recent case of layoffs of programmers and other employees at the U.S. company Playstudios, which laid off more than 100 employees in Serbia.
He added that Serbia is not the only country where engineers have lost jobs due to these cuts. According to some reports, Better Collective closed its entire branch in Portugal.
“When making these decisions, management doesn’t think about which country they’re closing offices in, but where costs are highest. In this industry, Serbia is no longer the cheapest option. Our salaries in this sector now rival those in Poland and the Czech Republic, while Latin America, excluding Brazil, currently has the lower-cost workforce. For this reason, investors are now hiring engineers in Honduras or Costa Rica, as they are cheaper and in the same time zone as Brazil, which is crucial for business,” Pejović explained.
(Biznis i Finansije, 01.11.2024)
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Publish date : 2024-11-01 12:39:00
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