Rackspace Slashes 750 Jobs as CEO Gajen Kandiah Pivots to Enterprise AI Cloud Infrastructure & Managed AI Services

Rackspace is reducing its workforce by 750 positions to pivot toward enterprise AI infrastructure and managed AI services, according to a report by The American Bazaar on June 28, 2026. CEO Gajen Kandiah is leading the restructuring to align the company’s operations with the growing industrial demand for artificial intelligence integration.

The layoffs are part of a broader strategic shift designed to move the company beyond traditional cloud hosting. According to The American Bazaar, the cuts coincide with a transition toward providing the specialized hardware and software environments required to run large-scale AI models for corporate clients.

Why is Rackspace cutting 750 jobs?

The company is cutting staff to fund and facilitate a pivot into the enterprise AI market. According to The American Bazaar, CEO Gajen Kandiah is shifting the company’s focus toward AI infrastructure, which requires different technical skill sets and operational priorities than the company’s legacy cloud services.

This move follows a trend among cloud service providers to move up the value chain. Rather than offering general-purpose cloud storage and computing, Rackspace is targeting “managed AI services,” where the provider handles the complexity of deploying, tuning, and maintaining AI models for businesses.

What is the new enterprise AI strategy?

Rackspace’s new strategy focuses on two primary pillars: AI infrastructure and managed services. According to the report, the company aims to build and manage the underlying compute power and data architectures that enable enterprises to deploy artificial intelligence.

Managed AI services typically involve overseeing the lifecycle of a machine learning model, including data ingestion, model training, and operational monitoring. By focusing on this layer, Rackspace intends to position itself as a bridge between raw cloud capacity and the specific needs of corporate AI applications.

How does this affect the cloud computing market?

The shift indicates a tightening of the cloud market where general managed services are becoming commoditized. By specializing in AI infrastructure, Rackspace is attempting to avoid direct competition with hyperscale cloud providers on price and instead compete on specialized expertise.

This transition mirrors a wider industry movement where traditional IT service firms are shedding legacy roles to hire specialists in GPU orchestration and data engineering. The reduction of 750 roles suggests a significant reallocation of human capital toward these higher-growth technical areas.

Based in Texas, Rackspace has historically operated as a multi-cloud integrator. The current restructuring under Kandiah signals a move toward a more vertical specialization in artificial intelligence to maintain relevance as corporate spending shifts toward AI-driven automation.