VANCOUVER —  Q4, the Toronto-based provider of an investor-relations platform, is laying off dozens of its employees, moving their roles to Latin America, where labour is cheaper.

The company laid off 23 people in North America on Sept. 29. Among the workers affected were developers, project managers, content specialists and staff in quality assurance. Q4 has told an additional 16 people their jobs would be made redundant by the end of the year. 

The company declined to specify how many of the layoffs happened in Canada. However, in an interview with The Logic, CEO and founder Darrell Heaps said the jobs are moving “from essentially Canada to Latin America,” while individuals who confirmed their layoffs on LinkedIn were all based out of Canada, according to their profiles. Q4’s most recent quarterly report noted that the majority of its employees are located in Toronto.

Many employees said the North American job cuts were unexpected, as they came just over a month after an eight per cent workforce reduction—part of a restructuring plan to get the company to profitability faster amid a market downturn.

Heaps said that Q4 was not classifying the job losses as layoffs because it is not reducing its headcount. Rather, he said, “it is a migration of those roles.” 

Heaps added that the geographic switch comes down to cost savings: “We are building up teams in Latin America that are lower cost than in North America.”

Q4 declined to say whether the North American staff were offered relocation. The company also declined to share the scope of the cost savings, or the names of the countries in Latin American to which the positions have moved, saying it would disclose more details during its next quarterly earnings call. However, LinkedIn showed that Q4 currently has 16 staff in Mexico and 12 in Brazil by late last week.

Overall, Q4 now employs about 50 people in Latin America, said Heaps. Based on previously released numbers, that represents about nine per cent of its overall workforce, which stood at roughly 600 before the August layoffs.

Prior to the September layoffs, it had a small team in that part of the world, said Heaps, but has started to scale up its presence there. “We will have a larger team in Latin America over time as we hire into that region,” he added.

In its second-quarter earnings call with investors, Q4 signalled a strategy change amid a market downturn that has rippled across the tech industry, prompting mass layoffs and other cost-cutting measures, along with a chill on private and public raises. Q4 would push to achieve profitability faster, while keeping more cash in its coffers. 

That would include optimizing sales efficiency and utilizing “low-cost geographies to drive down operating expenses,” said Heaps on the call.

Shortly afterward, in late August, Q4 announced a restructuring plan that included cutting eight per cent of its workforce, or 48 people, to reduce operating expenses. Those cuts came from its sales, marketing, and research and development teams.  When Q4 made its announcement on Aug. 23, it said that “resulting organizational changes have been fully implemented.” 

That was the first component of Q4’s change in strategy, Heaps told The Logic last week, and moving jobs to Latin America is the second. “Optimizing our human capital in utilizing various geographies around the world is an essential component to driving profitability,” he said, “not just for our company but for essentially every software company out there.” 

Heaps said Q4’s approach is “pretty standard” for scaling companies. In the current economic environment, he added, other companies are “absolutely” moving roles to other countries. Heaps cited wage inflation and operating expense costs as contributing factors.

Multiple people—current Q4 staff and those who lost their jobs—said the recent layoffs caught them off guard. The company had told staff “there won’t be any more layoffs,” after late August, according to a source with knowledge of the situation. The Logic agreed to withhold the person’s name because they are not authorized to speak on the matter.

Most layoffs are unexpected, said Heaps, but he boiled the reaction down to a misunderstanding. During a town hall held in August, an employee asked who else would be impacted.The question was understood to mean on that day, and not after late August, Heaps said, and that’s how it was answered. “It’s been no secret that we’ve been hiring and scaling up our team in Latin America,” he continued, adding that every employee knows when and where a new hire starts at Q4.

Q4’s investor-relations platform is mostly aimed at publicly traded companies, but also investment banks and investors. It claims to have nearly 2,700 clients including Shopify, Spotify, Netflix and Square. 

It was one of many Canadian tech firms to go public last year—part of the great Canadian IPO rush before a significant slowdown in 2022. Debuting late in 2021, Q4 had a lacklasture first trading day after downsizing its IPO to $100 million from an anticipated $150 million. Like much of the innovation-economy IPO class of 2021, its shares have since traded well below their offering price since.

While Q4 has seen a drop in demand, Heaps said the restructuring and job migration is not just a response to a lack of IPOs (and thus, new potential Q4 customers) but a proactive move to remain well positioned in the market. 

Speeding the company’s path to profitability, Heaps said, allows it to “conserve as much capital as possible, so that when the market does turn, we have significant cash reserves that we can deploy into initiatives that we see a high degree of return on.”