updated 05:30 pm EDT, Mon October 29, 2012
Nine independent programing teams combined into one
Online payment firm Paypal is cutting 325 full-time employees and 120 contractors as part of a reorganization by new president David Marcus. The firm said Monday that the jobs would be eliminated as it consolidates nine programming and product development groups into a single organization. Ebay will take a $15 million pre-tax restructuring charge in the fourth quarter related to the job cuts.
Paypal is considered to be a slow-to-develop company with layers of bureaucracy impeding rapid improvements. "In a large company, at some point you reach the law of diminishing returns when more people means slower," said Marcus. "You have a lot of duplication of roles with nine product groups merging into one."
Marcus claims he is pursuing the cuts and reorganization to help the development teams generate new products and services more rapidly to keep up with new rivals, such as Square, and Dwolla. "It's important to face the reality of the situation," Marcus said. "In some cases, we don't have better products and we have to do something about it."