In shocking news to its employees, SoundCloud, the digital music service provider, has decided to shut down its offices in San Francisco and London making roughly 41% of its staff unemployed.

Though SoundCloud had already talked about the possibility of a financial shortfall in January of this year, the company’s announcement of its cost-cutting move on Thursday came as a surprise. As per the report, the cost-cutting exercise will see as many as 173 of the 420 employees laid off. After the move, the operation of the company will be consolidated at its headquarters in Berlin and another office in New York only. However, the company is calling the layoffs as a way to have a better financial footing that will help it to compete against larger rivals – Spotify and Apple. In a blog post published on SoundCloud’s website, its co-founder and chief executive officer (CEO) Alex Ljung said that they need to ensure their path to a long-term and independent success. The CEO explained about the cuts that its goal is to remain a standalone business. By reducing costs while continuing on its revenue growth, the company is on the path to profitability and thereby ensure company’s independent future, as per a report.

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