Sophos Undertakes Company Restructuring, Staff Cuts Due To COVID-19: Reports

‘Sophos is implementing some internal restructuring to respond to the change in market conditions associated with COVID-19 ... A restructuring is always a difficult decision, but we believe it is necessary,’ the company tells CRN.

Sophos plans to cull its workforce by up to 16 percent and close some offices just three months after being acquired by private equity firm Thoma Bravo, according to media reports.

Sophos confirmed the restructuring in a statement to CRN, but did not respond to questions about how many workers were impacted and in what job functions or geographies. Thoma Bravo did not respond to a request for comment.

The Abingdon, U.K.-based platform security vendor has already started reducing headcount, with the coronavirus pandemic forcing Thoma Bravo to take steps to bolster Sophos’ short-term outlook and accelerate the company’s strategic transition, according to Private Equity News. The cuts will potentially amount to around 16 percent of Sophos’ overall headcount, Private Equity News reported.

[Related: Sophos Eyes More M&A After Close Of $3.9 Billion Thoma Bravo Deal]

“Sophos is implementing some internal restructuring to respond to the change in market conditions associated with COVID-19, and to accelerate the evolution already underway to our next-gen product portfolio,” the company said in a statement. “A restructuring is always a difficult decision, but we believe it is necessary to position Sophos for continued growth and success in the years to come.”

The job cuts are impacting staff across multiple divisions and geographies, though the United Kingdom is believed to be the worst-hit location, according to The Register website. One hundred employees, primarily from Sophos’ sales engineering division, were told last week that their services would no longer be required, The Register reported.

The company intends to continue hiring for positions that are aligned with its transformation plan and will consider staff affected by the job cuts for those positions where appropriate, Private Equity News reported. For the quarter ended March 31 Sophos said its next-generation product billings grew by 37 percent year-over-year and now represent more than 63 percent of the company’s overall business.

Sophos employs 3,400 people throughout 51 offices, according to the company’s 2019 annual report. The company doesn’t plan to close any of its facilities in the United Kingdom, according to Private Equity News.

More than 77 percent of Sophos’ 3,400-person workforce is based in one of five countries, according to the company’s 2019 annual report: India, with 819 employees; the United States, with 607 employees; the United Kingdom, with 589 employees; Germany, with 310 employees; and Canada, with 305 employees. Sophos has multiple offices in eight countries including 10 sites in India; four sites in the United States; three sites in Germany and China; and two sites in Canada, Austria, Italy and the Netherlands.

The job cuts are a departure from the expectation Thoma Bravo set when it first announced the $3.9 billion purchase of Sophos in October. At that time, Thoma Bravo said it didn’t expect a review of Sophos’ business and operations in the six months after the deal closed to result in a material headcount reduction. The acquisition closed in March.

Thoma Bravo said that it attached great importance to the skills, knowledge and expertise of Sophos’ management and employees, and therefore expected that the existing management and employees would be key to the company’s success going forward. Sophos CEO Kris Hagerman reaffirmed to CRN in February, before the full onset of the COVID-19 pandemic, that no material restructuring of the company’s business was expected under Thoma Bravo.

The private equity firm said in October that it planned to probe opportunities to streamline operational functions at Sophos to help accelerate top-line growth. Thoma Bravo also said at the time that it planned to reduce spending on legacy and noncore products while upping investment in areas like next-generation endpoint and network security that are expected to enhance the customer experience.

Thoma Bravo also said in October that it additionally planned to reduce noncritical administrative costs at Sophos as well as go-to-market program spending that offered a lower return on investment. The private equity firm has gotten deeper into cybersecurity with the purchases of Barracuda Networks, LogRhythm, Imperva, Veracode and Centrify, but just last month sold Idaptive to CyberArk for $70 million.