today announced it is to cut 58 employees from its workforce. The company joins several other hi-tech firms that have laid off workers due to budgetary considerations and pressure from shareholders.
Versaware's staff cut represents less than 4% of its worldwide workforce. Eighteen US employees are to be dismissed together with 40 others from the firm's R&D center in Israel.
Versaware's staff is considered huge for a start-up. As an e-publisher, the company converts printed books to a digital format. It has a large production center in India, where it benefits from employing a low-cost workforce of 1,250. None of the Indian workers are among those to be laid-off.
The large production center also makes Versaware's employee statistics seem more impressive, despite the recent staff cuts. At the beginning of 2000, the company employed just a third of the workforce it has today.
Versaware's management says that all of its digital-book business that is not directly related to the Internet will be transferred to the Indian plant. The firm's CEO Harry Fox insists that the cuts will ensure that Versaware heads back towards profitability, ensuring its long-term success.
Post-dismissals, the company's US staff will total 25 workers, and its Israeli R&D center will employ a staff of 130. But Fox might have to postpone his recently announced plan to expand the company's Indian workforce to 4,000.
Versaware was founded in 1997 by Fox. The company has developed an application for translating books into a multimedia format. It also converts printed books to a digital format for its own purposes, as well as for its customers which include publishing giant McGraw- Hill and the Internet division of the American media giant NBC.
The company completed its last round of financing one year ago, raising $25 million. At that time, the money was earmarked to be spent on an expansive promotional campaign. Today the company would probably have preferred to channel the money into its running costs instead of using it for a promotional campaign.
Versaware is currently involved in another private placement, and hopes to raise another $25 million. Investors include the venture capital fund of the Clal conglomerate, Capital Communications CDPQ, the Japanese
group, and U.S.-based BG Media.
Versaware had planned to go public at the beginning of 2001, but given the ongoing capital market slump this is now considered unlikely.