Salesforce Inc. plans to cut 10% of its workforce and close some offices, saying it needs to cut costs after rapid hiring due to the pandemic left them with “too many people” amid the economic downturn recession, sending their shares up 5%.
On Wednesday, the cloud-based software company said it expected to pay fees between $1.4 billion and $2.1 billion due to job cuts, of which about $800 million. up to 1 billion USD will be recorded in the fourth quarter.
Mass layoffs drive tech workers to startups
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Companies from Meta Platforms Inc. to Amazon.com Inc. over the past year have shrunk their employee bases in preparation for a deep recession as global central banks sharply raised interest rates to tame high inflation.
Businesses that rely on cloud services during the pandemic are now trying to reduce costs through job cuts or delaying new projects, hurting companies like Salesforce and Microsoft Corp.
Co-CEO Marc Benioff said in a letter to employees: “The environment remains challenging and our customers are taking a more cautious approach to their purchasing decisions. .
“As our revenue grew rapidly thanks to the pandemic, we hired too many people leading to the economic downturn we are facing and I am responsible for that,” added Benioff.
Salesforce had 73,541 employees at the end of January last year, up 30% from 2021.
The company’s growth has slowed over the past four quarters, with Salesforce posting its weakest revenue growth in the third quarter.
Joshua White, a finance professor at Vanderbilt University, said: “Companies will want to show voting shareholders that they can once again deliver value through a return on investment even in the short term. recession period. “Layers will be a big part of that equation.”
Salesforce said affected employees in the United States will receive a minimum of about five months’ salary, health insurance and other benefits.
