Business software giant Salesforce said Wednesday it planned to lay off 10 percent of its work force, or about 8,000 employees, and reduce office space due to concerns about the economy.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” said Marc Benioff, the company’s co-CEO. said in a note to employees cut announcement.
Salesforce’s revenue, like that of many other technology companies, boomed during the pandemic when more people around the world worked from home and relied more on technology to collaborate with colleagues remotely. In his letter, Mr. Benioff suggested that the company had hired too aggressively during that period.
Salesforce employed fewer than 80,000 people at the end of October, up from about 48,000 three years ago.
“We hired a lot of people to cope with this economic downturn that we’re facing right now, and I take responsibility for that,” Mr. Benioff said.
A spokeswoman for Salesforce said the company had no further comment on the cut.
The layoffs put the tech industry’s slump in even sharper relief. In recent months, tech giants like Amazon have slowed hiring and cut jobs, while smaller companies like Lyft and Stripe have also announced layoffs. Many of the industry’s largest firms reported financial results that showed they were feeling the effects of extremely high inflation and rising interest rates.
Social media companies are battling the pullback, especially in digital advertising. Meta, which owns Facebook and Instagram, cut 13 percent of its workforce in November and said its head count would remain “roughly flat” through the end of this year. Snapchat’s parent company Snap laid off 20 percent of its workforce in August, attributed to challenging macroeconomic conditions. Elon Musk, who bought Twitter for $44 billion in October, has slashed the company’s work force by more than half.
Salesforce sales rose 14 percent in latest quarter, slowest pace in years; It forecast even slower growth in its current quarter. Other tech chiefs, like Meta’s Mark Zuckerberg, have recently admitted to hiring too many people as they rushed to make cuts. More than 150,000 tech workers were laid off last year, according to Layoffs.fyi, a site that tracks job cuts.
Salesforce’s cuts come on the heels of the departure of some of its executives. In November, the company’s co-CEO, Brett Taylor, announced that he would resign from his position and leave at the end of the month. In December, Stewart Butterfield, chief executive of the Salesforce-owned workplace communication platform Slack, also said he would be leaving his position by the end of the month. Salesforce bought Slack in 2020 for $27.7 billion.
Salesforce is the largest private employer in San Francisco, and its flagship office building is the city’s tallest.
The company estimated the cost of the changes to be up to $2.1 billion. Salesforce is offering US employees at least five months’ pay as well as health insurance and career resources, Mr. Benioff said. Most of the cuts would come “in the coming weeks,” he wrote.
Shares of Salesforce rose more than 4 percent in premarket trading on Wednesday. Last year, the company’s share price had fallen by about 50 per cent.
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