Stability Matters: Why Vendor Resilience Is Crucial for Program Success

As the tech industry grapples with unprecedented layoffs in 2025, the ripple effects extend beyond the companies directly involved, impacting client organizations that rely on these vendors for critical services. The stability of vendors, particularly those providing employee engagement solutions, has become a focal point for businesses aiming to maintain morale and productivity during turbulent times.

AI Disruption Drives Record Tech Layoffs

April 2025 marked a staggering acceleration in tech job cuts, with more than 23,400 layoffs, nearly triple the number from March, according to Forbes. Giants like Intel, Meta, and Microsoft led the charge, slashing thousands of roles as part of sweeping operational shifts. These layoffs are part of a broader trend that saw nearly 281,000 tech jobs eliminated in 2024, surpassing previous years’ figures.

The reasons behind these cuts are multifaceted, including global economic uncertainty, elevated interest rates, inflation, and proactive restructuring, with many companies aggressively reallocating resources toward artificial intelligence.

Companies are now focusing on profitability and efficiency, often at the expense of workforce stability. McKinsey projects that up to 12 million U.S. jobs could be displaced by AI by 2030, and early 2025 already saw widespread eliminations of customer service and mid-level tech roles as automation takes hold.

Impact on HR Tech Vendors

The human resources and employee technology sectors are not immune to these trends. In May 2025, Workhuman, a prominent HR tech firm, announced layoffs affecting approximately 10% of its workforce, with one former employee stating on LinkedIn,

“𝘿𝙤𝙣’𝙩 𝙘𝙧𝙮 𝙗𝙚𝙘𝙖𝙪𝙨𝙚 𝙞𝙩’𝙨 𝙤𝙫𝙚𝙧, 𝙨𝙢𝙞𝙡𝙚 𝙗𝙚𝙘𝙖𝙪𝙨𝙚 𝙞𝙩 𝙝𝙖𝙥𝙥𝙚𝙣𝙚𝙙. Today, my 18-year chapter with Workhuman comes to a close, as I was impacted by a company-wide layoff.”

This is one of the many posts that circulated last month.

Such reductions within vendors can disrupt the services they provide, potentially compromising the effectiveness of employee programs.

Other companies have also made significant cuts:

• Workday announced plans to cut 8.5% of its workforce, equating to 1,750 jobs. (capacitymedia.com)
• Salesforce laid off over 1,000 workers across the company. (computerworld.com)
• Meta planned to lay off 5% of its staff, or around 3,600 employees. (computerworld.com)

These layoffs within vendor organizations can lead to service disruptions, affecting the client companies that rely on their platforms for employee engagement and HR functions.

The AI Pivot: Balancing Innovation and Human Touch

A significant driver behind these workforce reductions is the accelerated adoption of artificial intelligence (AI). Companies are increasingly integrating AI into their operations to enhance efficiency and reduce costs.

However, the integration of AI must be managed carefully to avoid undermining employee morale and trust. A study by Ernst & Young LLP reveals that 71% of U.S. employees harbor apprehensions about AI’s implications, with 75% fearing that AI may render certain jobs obsolete.

Transparency in AI systems emerges as a critical factor in promoting trust and positive employee attitudes. Organizations must ensure ethical and transparent AI practices alongside technological advancement.

Layoffs Affect the Remaining Internal Company Culture

Layoffs and rapid technological shifts can erode internal company culture. Employees may experience decreased morale, increased workload, and uncertainty about their roles. Such an environment can lead to disengagement, reduced productivity, and higher turnover rates, further destabilizing organizations.

According to Gallup’s report, disengaged employees cost the world an estimated $8.9 trillion, roughly 9% of global GDP. This highlights the importance of maintaining a positive work environment and investing in employee engagement, especially during times of organizational change.

The Importance of Vendor Resilience

For HR leaders, the success of an employee engagement program often rests on the strength of their vendor partnerships. When a trusted vendor undergoes internal layoffs, the impact doesn’t stop at their own org chart, it ripples outward.

Suddenly, the account manager you’ve built a multi-year relationship with is gone. Response times are slower. New team members may lack the context or experience needed to support your program effectively. And in worst-case scenarios, strategic initiatives stall altogether.

In 2025, these disruptions aren’t hypothetical, they’re happening. Cuts across multiple employee tech providers mean that countless HR leaders are now asking the same questions:

• Is our program still a priority for this vendor?
• Will our employees notice a dip in service or experience?
• Can we still count on the same level of innovation and support?

Vendor team turnover jeopardizes more than logistics, it can erode program momentum, damage trust, and compromise the employee experience your company worked hard to build.

This is why vendor resilience matters. HR leaders should feel empowered to hold their vendors accountable to a high standard of continuity and care, especially during turbulent times. Vendors should have:

• Transparent Communication: Clients should be proactively informed about internal changes, including changes in support structure, delivery timelines, or leadership oversight. If a vendor is silent during layoffs, it’s a red flag.
• Continuity Planning: Your vendor should have clear strategies in place to ensure program continuity when key personnel leave. This includes documented processes, account transition plans, and retained knowledge across the team.
• Commitment to Relationship Management: Stable, well-supported client-facing teams matter. Are they training replacements thoroughly? Are senior leaders stepping in to support your account during a transition?
• Retention of Core Values: Layoffs should not undermine a vendor’s commitment to your shared values around culture, recognition, and engagement. If it does, that’s a sign to reassess the partnership.

In today’s climate, it’s not enough for a vendor to simply offer a platform. They must demonstrate that they’re equipped to deliver consistently, confidently, and with a long-term view.

Humans, Not Hype, Drive Real Change

At WorkProud, we believe that technology should support, not replace, human connection. While AI is transforming the way recognition and engagement programs operate, no algorithm can replace the value of a consistent, responsive, and relationship-oriented vendor team.

For HR leaders navigating uncertainty, the priority should be clear: align with partners who invest in people, not just platforms. Vendor relationships should feel like an extension of your own team, steady, dependable, and committed to your goals.

Because at the end of the day, it’s not the flashiest tool or newest feature that drives employee loyalty and performance. It’s trust. Consistency. Human understanding. And that comes from resilient, relationship-centered vendor partners.