Xero’s new CEO Sukhinder Singh Cassidy has taken a hacksaw to the accounting software business, firing between 700 and 800 workers, and dumping small business lending platform Waddle.

The redundancies represent about 15 per cent of Xero’s current headcount, and were implemented to “streamline its operations, realign the business to drive greater operating leverage and better balance growth and profitability”, according to a filing with the ASX.

It is also dumping its small business lending platform Waddle, which it bought in 2020 for $31 million upfront, and a further $49 million in cash and shares depending on performance. This ‘exit’ will result in a $30-$40 writedown in the company’s full-year financials.

It’s part of a broader cost-cutting strategy, one that most tech companies have been forced to undergo in recent months.

The market has responded favourably, with shares leaping 8 per cent this morning, after an hour of trading.

“We have made strong progress on executing our strategy,” Singh Cassidy said.

“However, as we aspire to build a higher performing global SaaS company and to enable Xero’s next phase of growth, and drive better customer outcomes, we need to streamline and simplify our organisation.

“These changes, and our decision to reinvest in key strategic areas, will adjust our operating cost base as we balance growth and profitability, while taking a robust approach to capital allocation that supports long-term value creation.

“These are difficult but necessary steps as we work to further strengthen Xero for the future, while carefully balancing the interests of all our stakeholders.

“We don’t take these decisions lightly and we recognise today is a very hard day for our people.”