The news
Workday (WDAY) disclosed on September 29, 2026, that it will cut about 2.5% of its workforce, mostly within its Product and Technology team, and reduce some leased office space. The Workday layoffs will cost an estimated $65 million to $80 million, its 8-K filing said.
The filing said certain Workday functions announced reorganizations that day to better align team structures with the company's strategic growth priorities. Workday said it plans to keep hiring in key strategic areas and locations through its fiscal 2027. The filing did not give a number of affected employees or say which products the cuts touch.
Of the charges, Workday expects $55 million to $70 million in its fiscal third quarter and $10 million in the fourth quarter. The total includes $40 million to $55 million in future cash spending on severance, benefits and related costs, about $10 million in non-cash stock-based compensation and about $15 million for impairment of leased office space. Workday expects the employee actions to be substantially complete by the first quarter of fiscal 2028, subject to local laws and consultation requirements.
Workday reiterated the fiscal 2027 third-quarter and full-year guidance it gave on its August 27, 2026, earnings call, with one exception. Because of the charges, it now expects third-quarter GAAP operating margin to be about 20 to 21 percentage points below its non-GAAP operating margin, and full-year GAAP margin about 19 points below. Non-GAAP figures will exclude the charges.
This is the second workforce reduction Workday has disclosed in 2026. In an 8-K dated January 30, the company said a February 4 reorganization would eliminate about 2% of its workforce, mainly in non-revenue-generating roles in Global Customer Operations, with about $135 million in charges. On February 9, Workday said co-founder Aneel Bhusri was returning as CEO, replacing Carl Eschenbach, and Bhusri said at the time that "AI is a bigger transformation than SaaS."
The numbers
- Workforce reduction
- About 2.5%, mostly Product and Technology
- Total estimated charges
- $65 million to $80 million
- Cash severance and related costs
- $40 million to $55 million
- Leased office impairment (non-cash)
- About $15 million
- Q3 FY2027 GAAP vs non-GAAP operating margin gap
- About 20 to 21 percentage points
- February 2026 reorganization
- About 2% of workforce, about $135 million in charges
Why CEOs should care
For CHROs and CIOs who run Workday, the detail that matters is where the cuts land. The February round targeted customer operations; this one targets the Product and Technology team, the people who build and maintain the software. Ask your account team which roadmap items you are counting on still have committed dates, whether any modules or features are being deprioritized, and whether implementation or support teams assigned to you are affected. Anything that affects a renewal decision should be in writing.
For CFOs and procurement leads, the filing does not point to financial stress: Workday kept its non-GAAP guidance and said it will keep hiring in strategic areas. The risk to watch is product velocity, not vendor viability. If you are negotiating a renewal in the next few quarters, this is a reasonable moment to ask for price protection or service credits tied to delivery of named features, and to confirm service-level commitments are unchanged.
For boards and HR leaders planning their own AI-driven restructuring, Workday's filings show the real cost of reshaping teams. The two 2026 rounds together carry roughly $200 million to $215 million in estimated charges by our tally of the two filings, much of it office impairments and severance, and the employee actions run into early fiscal 2028, subject to local consultation rules. Budget for both the time and the one-time cost.
The bigger picture
Enterprise software companies are cutting in some teams while hiring in others as they rebuild around AI. Workday's two filings this year use similar language about aligning teams to priorities and continuing to hire in strategic areas, and its CEO has framed AI as a larger shift than the move to software-as-a-service. Workday has not said whether its total headcount will fall, so the cuts read as a reallocation rather than a retreat.
What’s next
Most of the charges land in Workday's fiscal third quarter, so its next earnings report should show their size and may bring more detail on which product areas were affected. The employee actions are not expected to be substantially complete until the first quarter of fiscal 2028, subject to local laws and consultation requirements, so the process will run for months. Customers should also watch Workday's product release notes and roadmap briefings for delays or dropped items.
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