Analyst(s): Keith Kirkpatrick
Publication Date: May 22, 2025
OpenText has expanded its Business Optimization Plan, adding $200 million in new restructuring costs to $260 million. The expansion includes a net reduction of 2,000 roles, most eliminated through automation and workforce realignment tied to AI adoption.
What is Covered in this Article:
- OpenText expands its Business Optimization Plan with an added $200 million in expected costs
- Plan includes a global net headcount reduction of 2,000 positions, up 1,600 from an initial estimate
- Expansion driven by AI-led automation, centralization, and simplification efforts
- Expected to generate $490–$550 million in annualized cost savings when fully implemented
- About 50% of the savings will be recognized in FY 2026, with the rest in FY 2027
The News: OpenText’s Board of Directors approved an expansion of the company’s Business Optimization Plan, adding approximately $200 million in costs to bring the total program to $260 million. The initiative focuses on final integration efforts following the Micro Focus acquisition, divestiture of AMC, and new investments in AI and automation.
The expansion will result in a total net reduction of about 2,000 roles globally, an increase of 1,600 positions from the original plan. The company expects the combined savings initiatives to deliver annualized cost reductions of $490–$550 million, half of which will materialize in FY 2026 and the remainder in FY 2027.
Is OpenText’s AI-Led Workforce Strategy a Long-Term Cost Fix or a Risky Reset?
Analyst Take: OpenText’s expansion of its Business Optimization Plan reflects a strategic reset anchored in AI adoption and operating cost rationalization. Following the Micro Focus integration and AMC divestiture, the company is prioritizing structural changes over discretionary growth, focusing on lean execution amid external pressures. The updated plan reinforces a shift toward long-term margin protection and internal efficiency over short-term revenue acceleration.
AI-Driven Workforce Transformation Reshapes Role Allocation
A central pillar of the expanded plan is OpenText’s move to an “AI-first” workforce strategy. The company is eliminating 1,600 additional roles across functions such as customer support, QA, documentation, and admin, areas where AI tools are now in active deployment. Simultaneously, it plans to selectively rehire in critical roles where human input remains essential, resulting in a net reduction of 2,000 positions globally. This dual approach reflects a deliberate transition to embed automation across core operations while realigning talent investment. By treating AI as an operational baseline rather than a productivity layer, OpenText is structurally redefining how labor contributes to enterprise value.
Cost Discipline Targets Margin Preservation and Cash Flow
With total optimization-related costs now projected at $260 million, OpenText expects to generate $490-$550 million in annualized savings, roughly split across FY 2026 and FY 2027. The plan encompasses not only workforce reductions but also facility consolidation and global simplification. Management has stated that these savings are essential to supporting its free cash flow target of $1.2-$1.3 billion in FY 2027. Without strong organic growth, the company is leaning on cost control as a direct path to margin stability and capital allocation flexibility, using internal levers to meet financial commitments irrespective of external demand.
Revenue Outlook Remains Constrained by External Shocks
OpenText’s emphasis on internal efficiency comes amid persistent revenue challenges. The company reported a 13.3% year-on-year (YoY) decline in the latest quarter, citing a $40-$50 million impact on bookings from U.S. tariffs and government spending reductions. Management acknowledged that enterprise decision-making remains cautious, particularly in auto, energy, and public services sectors. With top-line visibility clouded and cloud bookings running below expectations, OpenText is prioritizing what it can control – operating discipline and restructuring – over pursuing near-term growth acceleration. The optimization plan thus serves as a hedge against ongoing macro volatility. At the same time, the company recalibrates its strategic posture for FY 2026 and beyond, reflecting a calculated long-term cost fix, though one that carries execution and adoption risks that could limit its intended impact.
Addressing AI-Workforce Messaging Challenges
One of the key topics around the use of AI has been its effect on workers. Many vendors have, at times, highlighted how AI will not replace workers, but help augment their efforts. However, when workers are downsized and replaced at a vendor marketing AI features (due to moving to an internal AI-first strategy), it’s harder to argue that AI is solely a force for good, in workers’ eyes. As such, workers at OpenText’s customers may be less inclined to adopt and utilize these AI tools, for fear of putting themselves out of a job, particularly if they see that happen at the vendor level.
What to Watch:
- Achieving $490–$550 million in annualized savings depends on effectively executing workforce reductions, facility consolidation, and AI deployment without impacting day-to-day operations.
- Embedding AI as a baseline across support, engineering, and sales functions may face adoption or performance variability, potentially limiting intended efficiencies.
- Tariff-related booking disruptions and reduced U.S. government spending continue to pressure revenue visibility, especially in auto, energy, and public sector verticals.
- Slower enterprise IT decision-making and cautious budget planning could delay recovery in cloud bookings and reduce the near-term impact of AI product initiatives.
See the full filing detailing OpenText’s Business Optimization Plan expansion.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Other insights from Futurum:
OpenText Launches Core TDR, But Can It Stand Out in a Crowded XDR Market?
OpenText Q3 FY 2025 Earnings Highlight Cloud Growth and Cost Discipline
OpenText Expands Enterprise Automation with Titanium X and CE 25.2
Author Information
Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
