It took six years for VMware's Bulgarian office to grow from 800 to 1,700 employees before December 2023, when US chipmaker Broadcom finally took full control of the software giant. It then took just a year to cut VMware Bulgaria's staff by half.
In a rapid downsizing more akin to the dismantling of socialist-era industrial giants rather than a transformation of a technology company, what was until recently Bulgaria's largest software company is left with half its team. And a question mark looms over what part of it will exist in another year or two. Information about what will happen to the company is lacking - the prevailing assumption is that layoffs will follow, but there is no confirmation of such until they begin in earnest.
The great uncertainty
The speed with which staff layoffs are happening surprises many former and current employees at the company that Capital spoke to, as well as executives in the wider software industry. The ultimate target in terms of headcount remains unclear, and that doesn't just apply to the Bulgarian office - similar cuts are being seen globally, with all of VMware, according to Business Insider's sources, also being halved.
What makes the Bulgarian case specific is that until recently VMware was the largest software company in the country in terms of revenue and one of the largest in terms of number of employees. With few exceptions, for the last ten years, VMware Bulgaria has been at the top of Capital's K100 ranking of the largest software companies in the country. For 2023, its revenues reached 359 million levs and its result has probably continued to be impressive even during the past turbulent year.
Part of a plan?
The abrupt switch from VMware's organic strategy to Broadcom's adds to the sense of shock. It is shared by the company's customers. Beyond the internal changes, Broadcom is also changing VMware's overall strategy. The company, which primarily develops data virtualization software, changed its policy toward users almost immediately.
All products are moving to a subscription plan, with noticeably higher prices, instead of the previous licensing model. Support has been reduced along with the capacity of the teams. Many of the products are starting to be sold in bundles, whether individual customers need them or not. Dissatisfaction is even leading to legal action from larger customers that is causing VMware to take some steps back.
Broadcom's global strategy seems to be the same as it is in Bulgaria - cut costs as much as possible, raise product prices and let them continue to make money because of the strong position VMware has built over the last 20 years. According to Business Insider's sources, when the company was finally acquired, its worldwide employees numbered 38,000, while in January 2025 they were already 16,000.
What the long-term effects will be for software products is an open question, but in terms of financial performance, the exchanges are taking well to what's happening with VMware and Broadcom CEO Hock Tan's strategy. Broadcom shares have tripled since the initial VMware deal announcement and doubled since the final acquisition. Until recently, Broadcom had a valuation of more than $1 trillion in market capitalization before the stock markets entered a correction and the company lost about a fifth of its value.
That valuation is not a direct indicator of the success or failure of the VMware deal, because Broadcom is one of the world's biggest profitable companies because of the surge in artificial intelligence and greatly increased demand for chips. It could be indicative of future deals where companies are acquired with the aim of cannibalizing them from within.
It took six years for VMware's Bulgarian office to grow from 800 to 1,700 employees before December 2023, when US chipmaker Broadcom finally took full control of the software giant. It then took just a year to cut VMware Bulgaria's staff by half.
In a rapid downsizing more akin to the dismantling of socialist-era industrial giants rather than a transformation of a technology company, what was until recently Bulgaria's largest software company is left with half its team. And a question mark looms over what part of it will exist in another year or two. Information about what will happen to the company is lacking - the prevailing assumption is that layoffs will follow, but there is no confirmation of such until they begin in earnest.
