Houghton Mifflin Harcourt to Cut 8 Percent of Workforce
Houghton Mifflin Harcourt plans to cut 8 percent of its workforce by the end of this year and reduce its spending on content development by 20 percent over the next three years, the company has announced.
The Boston-based publisher, education content-provider and technology company employs nearly 4,000 people, said CEO Jack Lynch, who shared that number in a New York-based event and webinar broadcast on Oct. 17.
The changes are part of its “ongoing strategic transformation to simplify [the company’s] business model and accelerate growth,” according to a filing earlier this month with the U.S. Securities and Exchange Commission.
“This is a story about the marketplace shifting more and more to digital content,” said Trace Urdan, managing director at Tyton Partners, an investment bank and strategy consulting firm.
“This move should not be viewed as a sign of [HMH’s] weakness, but really as a sign of their strength,” he said, in that it signals the willingness of a long-standing publisher to make changes to be competitive in a market that increasingly relies on technology.
In the HMH presentation, Lynch discussed the acquisition of Waggle earlier this year, and the educational capabilities that the artificial intelligence platform presents for students.
The cost of streamlining operations will include $11 million to $13 million to pay for severance and other termination benefit costs, and another $1 million to $3 million to pay for consolidation of office space.
Lynch announced preliminary third-quarter results for HMH, which has seen a 25 percent increase in its extensions business, and a 50 percent increase in its core business.
Extensions include intervention, supplemental materials and the professional learning that goes with them, and Lynch said it’s a $6 billion business, of which HMH has a 10 percent share.
Lynch touted his company’s ability to deliver “great results” in the market, and credited the “nearly 4,000 purpose-driven people who work at HMH who have produced these results. The way they’ve produced [them] is every day they get up and are committed to delivering value and impact for the customers we serve.”
In August, the company announced a boost in revenues and changed its strategic and technology leadership.
The company’s final third-quarter earnings report will be released Oct. 31.
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Automation, and rising demands for tech and software skills were bigger motivators in workers pursuing more education than other factors, such as receiving a promotion on the job, said Asha Choksi, Pearson’s vice president of global research and insights, who led the study.