Innodata shares fall 28% amid reports of layoffs affecting about 550 employees in India
Key Facts
Innodata shares fell 28% in Tuesday’s trading on October 27 after reports of layoffs in India and the Philippines, marking the stock’s steepest intraday decline since February 2024, according to Investing.com. India Today estimated that about 550 employees in India were affected by the move on October 26, and said further layoffs took place in the Philippines without specifying a number. The company had not publicly confirmed the total number affected in the two countries when the report was published. The stock closed at $44.74 on October 27, according to EL7-provided data. The decline comes as markets track the impact of a reduction in a commercial engagement at a company that relies heavily on a limited number of customers for revenue.
India Today cited a termination letter it said it had reviewed, which stated that the company had decided to end the employee’s employment “due to the reduction in the commercial engagement for which you were hired,” with October 26, 2026, set as the last working day. The report does not specify how many employees the letter applies to or establish that this reason applies to all those affected. The estimate of about 550 applies to employees in India alone, while no figure was given for the layoffs in the Philippines. As a result, the company had not disclosed the overall scale of the cuts at the time of the report. This uncertainty puts the details of the commercial engagement reduction at the center of investors’ attention.
Concerns about the scale of the engagement’s impact matter in light of revenue concentration. In its disclosure for the first half of 2026, the company said one customer accounted for about 46% of revenue and another for about 26%. The largest customer had accounted for 59% of revenue in the corresponding period of 2025, according to the same disclosure. In its second-quarter earnings announcement, management said the largest customer’s share had fallen to 37% of revenue, compared with 56% in the first quarter. Meanwhile, the share of a big tech customer the company had announced in the previous quarter rose from 17% to 34% between the quarters.
These figures show the largest customer’s share declining between the two quarters as the other customer’s share grew, but they do not eliminate the company’s continued reliance on two major customers. Management said the largest customer contributed less revenue in the second quarter than in the first, but it still expects that customer’s revenue to grow year over year in 2026. That means monitoring the impact of the commercial engagement reduction also involves whether the company can sustain growth in existing programs. India Today’s report did not explicitly link the layoffs to an announcement that a relationship with a specific customer had ended. The company’s upcoming disclosures on customers and business volumes therefore remain relevant to assessing the news’s impact on its outlook.
Innodata reported revenue of $92.1 million in the second quarter of 2026, up 58% year over year, and net income of $14.4 million. The company attributed the revenue increase mainly to higher volumes of AI data engineering services within existing customer programs. The former CEO described the quarter as a record, saying the company had delivered “its twelfth consecutive quarter of year-over-year growth.” Management also reaffirmed its expectation that fiscal 2026 revenue would grow 40% or more year over year. These results and prior guidance put the layoffs against a record of strong growth, while the effect of the commercial engagement reduction on the outlook remains a question the market will monitor.
The news follows a planned leadership transition at the company: Innodata announced that Rahul Singhal would become CEO on September 30, 2026, while founder and CEO Jack Abuhoff would move to the role of executive chairman. Innodata is scheduled to report third-quarter results after the market closes on November 5, 2026. The company set the investor call for 5:00 p.m. Eastern Time that day. The upcoming results will be the first scheduled financial update after the layoff reports. They will also provide an opportunity to track revenue growth guidance and customer concentration in light of the information the company previously disclosed.