Salesforce has announced it will cut about 10% of its workforce, affecting more than 7,000 employees, while also closing offices in “certain markets.”
In a letter to employees and a corresponding one Submit with the Securities and Exchange Commission (SEC), Marc Benioff, CEO of Salesforce, referred to the “challenging” environment in which it operates, pointing to the “more measured approach” its customers take in their purchasing decisions.
As with other companies hit by significant layoffs in the past year, Benioff added that Salesforce had overhired during the pandemic during its boom. For context, the company claimed 79,000 workers last Februaryan increase of 30% compared to 2020.
“I’ve been thinking a lot about how we got to this moment,” Benioff wrote. “As our revenue accelerated due to the pandemic, we overhired, leading to this economic downturn we are now facing, and I take responsibility for that.”
Benioff said those affected in the US will receive a “minimum” of nearly five months’ wages, as well as health insurance and “other benefits to help with their transition”. Outside the US, Benioff said employees can expect a “similar level of support”.
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The news comes just a few months after activist investor Starboard Value acquired a stake in the enterprise software company, with our analysis at the time concluding that Starboard was seeking cost-cutting measures as part of its investment. To be sure, Salesforce unveiled a first round of layoffs in early November involving “hundreds” of workers, with co-CEO and co-chairman Bret Taylor announcing shortly after that he would step down.
With just four days into the new year, there’s little sign of the economic headwinds abating, and today’s news follows a slew of major layoffs last year, including Facebook parent Meta who laid off 13% of its workforce and Stripe who laid off 14%. deleted. There are already reports that Tesla is gearing up for a new wave of layoffs in the first quarter of 2023, while Amazon secured an $8 billion loan this week as part of its broader measures to address the “uncertain macroeconomic environment” to go.
As with just about every other technology company, Salesforce has also faced significant headwinds. After hitting an all-time valuation peak of over $300 billion at the end of 2021, Salesforce’s market cap has undergone something of a “correction” in the intervening months and now sits at around $134 billion – roughly where it was three years ago . The company also declined to provide a 2023 revenue forecast in its most recent earnings report last year.
Salesforce said the restructuring effort will cost it between $1.4 billion and $2.1 billion, which it expects to do in the fourth quarter of fiscal 2023.