Rackspace cuts 750 jobs to expand enterprise AI strategy

Rackspace Technology is cutting about 750 jobs, roughly 15% of its global workforce, to shift resources toward enterprise artificial intelligence. The reduction was approved by the company’s executive committee on June 10 and is expected to deliver annual savings of $75 million to $85 million once fully implemented. Rackspace said most impacted employees were notified around June 10, with additional departures expected over the next six months depending on local regulations. The company anticipates $14 million to $19 million in severance and restructuring costs during 2026. The layoffs accompany a pivot away from parts of its legacy public cloud business, toward what it calls “governed enterprise AI” for regulated industries including healthcare, financial services and government. CEO Gajen Kandiah, who took over in September 2025, is centering the turnaround strategy on AI, including partnerships announced with AMD and Palantir. The firm employs about 5,000 people globally, including around 1,800 in North America and about 2,400 in Asia.