The cuts will likely hit new apps and functionality the hardest, but analysts are divided on how legacy applications will fare.
Oracle’s announced $1.6 billion restructuring plan is barely underway, with just $415 million spent as of Aug. 31, which means a significant number of layoffs is still pending. Forrester projects there will be roughly 10,000 more by the end of December.
Even though that is not a massive number for a company with a worldwide workforce of 160,000 employees, analysts predict that it is still likely to have a significant impact on operations and product lines.
Although the exact layoff numbers, the business units likely to be hit, and the magnitude of those layoff numbers per unit, have not yet been announced, analysts believe they have a fairly good handle on what will happen.
Fewer new apps and functions
Abhishek Singh, a partner at the Everest Group, argues that Oracle’s decision, announced on Monday, to replace its longstanding CEO with two CEOs gives a big clue where the layoffs will likely hit.
The change in the CEO structure “makes it somewhat clear how this is likely to play out: with fast-growing cloud and AI infrastructure under one mandate, and industries, healthcare, and applications under the other,” Singh said. “That separation means Oracle can push aggressively into hyperscale growth while applying tighter discipline and consolidation in businesses that drag on margins or no longer fit the long-term strategy.”
In Singh’s view, that means, “[the layoff] pressure will fall heaviest on legacy application suites, overlapping corporate functions and some international operations. But even the infrastructure side is not immune — on-premises support and lower-margin infrastructure services could be candidates for carve-outs or divestitures, as Oracle sharpens its focus on hyperscale AI.”
Singh sees that translating into continued support for existing offerings, but with the strong potential for perhaps fewer new apps or less new functionality.
“For CIOs, the risk is not day-to-day product support disruption. Oracle knows it can’t afford [to cut] that. The real risk is in portfolio focus: products and verticals that don’t map to Oracle’s AI/cloud trajectory could be streamlined, thinned down, or even sold off,” Singh said. “CIOs should be asking: is the Oracle stack I depend on at the center of the company’s next S-curve, or sitting at the periphery? They should investigate their portfolio from that lens.”
That also could mean bad news for older offerings, especially those considered legacy.
“I believe Oracle will trim or exit some of its older on-premises support businesses, parts of its legacy applications portfolio, and non-strategic international operations, while doubling down on AI infrastructure, healthcare, and regulated industries.” Singh said. “Let’s see what plans the new CEOs come up with after they settle in.”
Agentic AI could enable layoffs
Akshara Naik Lopez, a senior analyst with Forrester, sees layoffs impacting Oracle somewhat differently, although she agreed with some of what Singh predicted.
Lopez said that she does not think that layoffs will dramatically impact the core applications business. “Oracle is not abandoning the applications market,” she said. “They are even trying to create their own EHR [electronic health records application].”
But Lopez noted that there is a lot of corporate “bloat” within Oracle, due to many years’ worth of acquisitions and overlapping corporate functions.
“I don’t feel that this will impact customers, but it will impact partners. I do not think they are going to divest any industry apps. Oracle industry apps are very well adopted in the market,” Lopez said, adding that she sees the most potential for the layoffs being enabled by some of Oracle’s agentic efforts.
She believes that Oracle will soon get to the point where customers can leverage Oracle agentic AI and create their own custom apps, or at least add their own custom functionality to existing Oracle apps.
If that pans out, Lopez said, it could mean that some Oracle workforce focused on those app expansions could be laid off without it hurting customer capabilities. In theory, she said, it could allow customers to add those capabilities in whatever timeframe, and within the budget, they need.
“Let’s say a customer wants certain capabilities that are not in the product line. You can use [Oracle’s agentic] platform and have it create something for you for just a short duration of time and then you can turn it off when you no longer want it,” Lopez said. “It’s almost transferring the power with the agentic AI capabilities to the customer so they can actually do it themselves or with partners.”
For the moment, Lopez said, Oracle is not quite at “that sophistication or maturity level.”
But, she pointed out, even with that agentic AI strategy, Oracle is still likely to lay off talent associated with some specialized apps.
“[For] some of the ancillary apps,” Lopez said, “I do agree that they may not make significant investments in adding a whole bunch of features, because you still have to keep maintaining those features over a period of time.”
She also stressed that, as those agentic AI efforts become more sophisticated and are used more, the associated costs may sharply increase.
Today “all embedded agentic AI [is delivered] at no extra cost, which may change in the future,” Lopez said.
