“You are subject to recommended resignation”… Even ‘this company’ has decided to reduce its workforce by 5%

It was confirmed on the 23rd that NCSoft, which is experiencing the greatest crisis since its founding due to a series of poor performance and plummeting stock prices, has begun to reduce its workforce, focusing on low performers in non-development and support organizations.

Although the specific size has not been made official, it is reported that at least 5% of the total workforce will undergo the recommended resignation process.

According to what multiple NCSoft officials said on this day, the company is sequentially notifying individual parties of recommended resignations, including back-office personnel who are in the lowest grades of internal evaluation. It is understood that front-line organizational leaders have already received guidance from management about the scale of workforce reduction for the teams they lead.

Those subject to workforce reduction in this regard are expected to begin retirement procedures as early as next month. An NCSoft employee said, “The news of some employees being recommended for resignation is spreading throughout the entire organization.”

However, it is unclear to what extent the workforce reduction will proceed. There is talk going around inside NCSoft that the development organization will also be subject to restructuring only for low performers.

In response to this, NCSoft declined to comment, saying, “We are reviewing various measures to improve the company’s structure, and no details have been confirmed regarding the workforce (restructuring).”

The gaming industry is predicting that NCSoft has signaled a full-scale restructuring. Of course, NCSoft is the company with the largest workforce among major domestic game companies, with a total number of employees currently exceeding 5,000. The number of employees, which was around 2,500 in 2016, doubled in just eight years. The rapid increase in manpower due to the boom in the gaming industry during the COVID-19 period had a significant impact.

However, as the performance slump began in earnest after the pandemic, cost issues such as labor costs began to be discussed.

NCSoft’s consolidated sales last year amounted to KRW 1.7798 trillion, a 30% decrease from a year ago. During the same period, operating profit also plummeted by 75% to only 137.3 billion won. Declining sales of NCSoft’s representative cash cow, the ‘Lineage’ mobile game series, as well as a slump in new games were cited as causes. Performance in the first quarter of this year is also expected to be significantly sluggish.

As a result, NCSoft closed down some new businesses, such as entertainment and artificial intelligence (AI) finance.

Meanwhile, it is understood that NCSoft is not considering voluntary retirement for its entire organization. There is concern that if artificial restructuring is carried out, even essential personnel may leave.

Another NCSoft official said, “Movements are being made to increase productivity by large and small organizational units,” adding, “We are taking a close look at the company’s overall business portfolio, including games, and eliminating non-core businesses that are deemed uncompetitive.”

Previously, NCSoft CEO Park Byeong-moo said at a media briefing held ahead of the official launch of the co-representative system last month, “Efficiency that focuses only on numbers eliminates the competitiveness and roots of a company,” and added, “All departments can complement each other to strengthen core competitiveness.” “We will strengthen management efficiency,” he said.

It is said that CEO Park’s plan is to establish a data-based competency evaluation system that allows all members to accurately perceive the situation and establish responsibility and a corresponding performance compensation system by clarifying the roles and goals of each organization and member.