Appen to Close North American Offices and Cut Costs After Losing Google Contract
Sydney-based data-annotation provider, Appen, has announced plans to close two of its North American offices as part of a cost-cutting initiative following the loss of its contract with Google. The move is set to reduce annualized costs by $13.5 million and is directly related to the termination of Google’s projects by March 19.
Appen, which relies heavily on Google for 30% of its revenue in 2023, will shut down its offices in Bellevue and Toronto. Former CEO, Armughan Ahmad, who was based in Toronto, left the company last week after a 14-month tenure. Appen aims to achieve 80% of the planned cost savings by March, with the remainder expected to be implemented by June. The company’s fiscal 2025 accounts will reflect the first full-year benefits of the cost-cutting measures.
Australian data-annotation provider, Appen, has decided to close two of its North American offices in the wake of losing its contract with tech giant Alphabet Inc.’s Google. The company, which expects to reduce annualized costs by $13.5 million, is taking this step due to the termination of Google’s projects by March 19. Appen’s offices in Bellevue and Toronto will be shut down as part of this round of cost cuts. It is worth noting that former CEO Armughan Ahmad, who was based in Toronto, recently quit the company after a short tenure of just 14 months. Appen plans to achieve 80% of the targeted cost savings by March, with the remaining 20% expected to be implemented by June. The positive impact of these cost-cutting measures will be seen in Appen’s fiscal 2025 accounts.
Analyst comment
Negative news: Appen’s decision to close its North American offices and cut costs after losing its contract with Google is seen as a negative development. The company heavily relies on Google for revenue, and this loss will have a significant impact. Although the cost-cutting measures aim to reduce expenses by $13.5 million, the closure of offices and the departure of the former CEO may indicate underlying issues. It remains to be seen how the company will recover and adapt to this loss.
