Varolii Confirms New Round of Layoffs This Week

8/26/10

Varolii, a Seattle-based company that develops tools for automated business communications, laid off an undisclosed number of employees this week. The story was first reported by TechFlash. Varolii’s director of public relations and customer programs Robin Rees confirmed the layoffs with Xconomy, citing ongoing corporate strain due to the downturn in the economic climate.

“While the economy has improved somewhat, it continues to be a challenging environment,” she wrote in an e-mail. “At the beginning of the economic downturn, we made some adjustments, even as our revenue continued to grow in early 2009. But since the economic slowdown has lasted longer than expected, our growth has slowed, and the company needed to right-size its operations and costs in order to maintain its market leadership and continue its investment in its product and services offerings.”

The adjustments Rees was referring to came in the form of an initial round of cuts made in January 2009, when the company laid off eight percent of its employees. Even after downsizing, the company still had more than 300 people on staff, though they never clarified exactly how many were let go.

“We did have a layoff in January 2009. We made targeted cuts within a few areas of the company, amounting to a small number of employees. We never stated publicly how many employees were let go or what percentage of the workforce was affected,” Rees said.

It was Varolii’s software-as-a-service business model that kept the company somewhat insulated up until this point, Rees said. “We have historically enjoyed double-digit year-over-year growth, and we’ve invested in our people and infrastructure accordingly. Our headcount, in particular, increased dramatically from 2004 to 2008,” she added.

Despite its prior growth, the company has not been immune to economic pressures over the last year and a half. While Rees acknowledges that cuts were made, she wouldn’t comment on specific numbers—then, or now. TechFlash, however, has cited two anonymous sources who say the number was around 50. Rees did confirm that Varolii still has “more than 250 employees on the active payroll.”

Varolii is cleverly named after the Pons Varolii, a neural pathway in the brain. The company specializes in building tools to help businesses better communicate over multiple channels, including voice, SMS, fax, Web, and e-mail, to name a few. It has been an interesting company to watch over the last few years. After reporting $68 million in revenue in 2007, the company filed for an IPO and planned to raise $86 million, only to shelve its plans to go public a year later “due to the difficult market conditions for initial public offerings.” The company was named one of Washington State’s 100 Best Companies to Work For by Seattle Business magazine just last month.

As for what’s in Varolii’s future, Rees says the company is in “a good position to weather this economic downturn.”

“Our software helps companies cut costs, collect more revenue and improve customer loyalty—three key strategies forward-thinking companies are using to maximize results during the recession. We believe our ongoing efforts to carefully manage our business and maintain control of our own destiny will help us emerge from this downturn a stronger, more successful company,” she said.

Rees also said, however, that there are never any guarantees, and while the company hopes to make a speedy recovery, it all depends on the health of the economy.

“Of course we want to bounce back and get back into hiring mode. We’re just going [to] have to see how quickly the economy rebounds. When it makes sense for us to do so, we’ll definitely be looking for quality employees that will help us grow and expand,” she said.

Thea Chard is a correspondent for Xconomy Seattle. You can e-mail her at theachard@gmail.com or follow her on Twitter at http://twitter.com/theachard. Follow @

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