Rackspace cuts 750 jobs to expand enterprise AI strategy

*Rackspace cuts 750 jobs as the cloud company redirects investment toward enterprise AI and long-term business transformation.*

Rackspace Technology is reducing its global workforce by approximately 750 employees, representing about 15% of its staff, as part of a strategic shift toward enterprise artificial intelligence. The restructuring follows the company's efforts to strengthen its position in the growing AI infrastructure and managed services market.

The job cuts are expected to deliver annual cost savings of $75 million to $85 million, which Rackspace plans to reinvest in AI-focused initiatives, including engineering talent, enterprise AI infrastructure, and advanced AI solutions for business customers.

The company said most affected employees have already been notified, while additional workforce reductions will be completed over the coming months in accordance with local labor regulations. Rackspace also expects to incur restructuring and severance expenses during the implementation process.

Under CEO Gajen Kandiah, Rackspace has prioritized AI as a key part of its turnaround strategy, expanding partnerships and focusing on secure AI services for industries such as healthcare, finance, and government. The move reflects a broader trend among technology companies reallocating resources toward artificial intelligence while streamlining traditional business operations.