LevelBlue Lays Off 15% of Employees After Being Sold by AT&T

LevelBlue laid off 15% of its 1,000-person workforce just months after AT&T sold a majority stake in the managed cybersecurity services firm to WillJam Ventures.

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The Dallas-based company said the cuts will allow LevelBlue to refocus its resources on improving the depth, quality and delivery of its managed security services, adding that it is continuing to hire in areas that are better aligned with the needs of partners and customers. The workforce reduction comes less than two months after the company rebranded from AT&T Cybersecurity and debuted as LevelBlue (see: LevelBlue Leverages AI for Threat Intel Following AT&T Split).

“LevelBlue has decided to restructure our business operations to support our company mission of simplifying cybersecurity for businesses,” the company said in a statement. “We are grateful for the contributions of all of our team members, past and present, in building LevelBlue into a global leader in the managed security services industry.”

The LevelBlue layoffs were first reported on X by Omdia Managing Principal Analyst Eric Parizo and were confirmed by the company to Information Security Media Group. AT&T said in November it would move its security software, managed security operations and security consulting resources into a joint venture majority owned by WillJam, and AT&T would retain a minority position.

Layoffs Rude Awakening for Newly Launched Company

A number of former LevelBlue employees have posted on LinkedIn in recent days about losing their jobs, including people who held product management and business development roles and had expertise in areas such as payment security, fraud, identity and access management, firewalls and secure access service edge. There are also a number of recent threads on TheLayoff.com about the job cuts at LevelBlue.

LevelBlue’s chief executive since April has been Bob McCullen, who’s also WillJam’s founder and leader. He ran Trustwave from 2005 to 2015, when it was acquired by telecom conglomerate Singtel for $770 million. Serving under McCullen as LevelBlue’s president is Sundhar Annamalai, who rejoined AT&T as president and CTO of their cybersecurity business in August 2022 after spending 18 months at Humana (see: AT&T Forms Joint Venture for Managed Cybersecurity Business).

WillJam also owns PCI security services vendor VikingCloud as well as managed detection and response provider GoSecure. VikingCloud grew its headcount by more than 80% to 557 workers during McCullen’s more than three years as chairman of the board, while GoSecure’s headcount fell by 3% to 183 workers between the start of 2021 and November 2023, when McCullen left the board, according to IT-Harvest.

McCullen told ISMG last month that he wants to grow LevelBlue’s business outside the United States from just 10% today to 30% within a couple of years by investing in direct client relationships. He said LevelBlue also will pursue acquisitions to strengthen its technology stack, support and enhance its cloud platform offerings and expand its geographical footprint.

Struggles Persist for Large, Global Managed Security Providers

Much of AT&T’s cybersecurity know-how comes from its $600 million purchase of threat intelligence vendor AlienVault in August 2018. Longtime AlienVault President and CEO Barmak Meftah took over as leader of AT&T’s newly formed cybersecurity solutions business unit, but he left in July 2020 and co-founded venture capital firm Ballistic Ventures in January 2022 (see: Why Is AT&T Cybersecurity Such a Good Acquisition Target?).

Many pure-play global managed security service providers have struggled in recent years as customers opt for newer technologies or different approaches. The private equity affiliate of former Secretary of Homeland Security Michael Chertoff’s advisory firm purchased Trustwave in January for $205 million, meaning the company lost nearly three-quarters of its value during its time under Singtel’s ownership.

Trustwave’s headcount has fallen 19% to 1,152 workers between the start of 2020 and today. HelpSystems – now Fortra – agreed to buy Alert Logic in March 2022, and the firm’s headcount nosedived by 62% to 248 workers between January 2020 and today. And Secureworks – which is majority owned by Dell – has seen its headcount slump by 35% to 1,760 people over the same time frame, IT-Harvest found.