Rackspace cuts 750 jobs to pivot toward AI services

Rackspace Technology announced it will eliminate roughly 750 positions, representing a 15% reduction of its global workforce of about 5,000 employees. The layoffs are part of a strategic shift away from legacy public‑cloud services toward building enterprise AI infrastructure.

The company said the cuts will cost $14 million‑$19 million in severance and related expenses but are projected to generate $75 million‑$85 million in annual savings that will be reinvested into AI engineering and data‑center capabilities. Rackspace, headquartered in San Antonio, Texas, has previously reduced staff in 2021 and 2022 and recently signed a memorandum of understanding with AMD to develop AI‑focused technology.

The move follows the appointment of new CEO Gajen Kandiah and reflects the broader industry trend of prioritising AI workloads over traditional cloud offerings.