Salesforce has announced plans to lay off 10% of its staff and close some offices, as the company admits it “hired too much.”
“I’ve been thinking a lot about how we came to this moment,” co-Chief Executive Officer Marc Benioff said in a letter to employees.
“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”
The company expects the move to lead to about $1.4-billion to $2.1-billion in charges, of which about $800 million to $1 billion will be recorded in the fourth quarter of fiscal 2023.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Benioff said in the letter.
The company said affected employees in the United States will receive a minimum of about five months’ pay, health insurance, and other benefits while those outside the country will receive a “similar level of support.”
Salesforce shares — which fell about 44% in 2022 — rose 2.5% in pre-market trading on the news.
The company now joins the likes of Meta, Snap, and other tech giants by uncorking a major cost-cutting initiative amid a more muted demand backdrop.
Businesses that relied on cloud services during the pandemic are now trying to reduce expenses through job cuts or delaying new projects, which has hurt companies such as Salesforce, which owns the office messaging app Slack, and Teams parent Microsoft.
