Salesforce is laying off about 10% of its workforce, citing a “challenging” environment
Salesforce is laying off about 10% of its workforce, more than 7,350 employees, in the latest round of tech job cuts as companies cut software and other spending.
The San Francisco-based cloud computing software company will also close some offices, according to a regulatory filing filed Wednesday.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” CEO Marc Benioff said in a letter to employees. “With this in mind, we have made the very difficult decision to reduce our workforce by approximately 10 percent, primarily over the coming weeks.”
Benioff said laid-off employees would receive nearly five months of salary, health insurance, career resources and other benefits.
Salesforce employs approximately 73,500 people.
“Smart Poker Move”
“CRM is clearly seeing headwinds in this space and is looking to adapt quickly to a slowing demand environment,” Wedbush analyst Dan Ives said in a report. “This is a smart move by Benioff to preserve margins in an uncertain environment as the company has clearly overbuilt its organization along with the rest of the tech sector in recent years and is now showing signs of slowing down.”
Tips on what to do if you’ve been laid off 03:43
The company anticipates costs of between $1.4 billion and $2.1 billion related to its plan. This includes costs of $1 billion to $1.4 billion related to employee transitions, severance payments, benefits and stock-based compensation. There will be $450 million to $650 million in office closure fees. It is expected to incur approximately $800 million to $1 billion in fees in its fiscal fourth quarter.
Tech companies aggressively hired staff during the pandemic to keep up with rising demand, but Salesforce had been growing rapidly since at least 2018. The workforce has more than doubled between then and 2021.
The workforce restructuring effort is expected to be mostly complete by the end of Salesforce’s fiscal 2024. The measures related to the closure of the offices are expected to be fully completed in the 2026 financial year.
Salesforce shares are up more than 3% before the opening bell.
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