Signage on a Salesforce office building in San Francisco, California, on Tuesday, February 2nd. 23rd, 2021.
David Paul Morris | Bloomberg | Getty Images
Foreclosure The company announced on Wednesday that it is cutting 10% of its staff and some office space as part of a restructuring plan. The company employed more than 79,000 people in December.
In a letter to employees, co-CEO Marc Benioff said that given the challenging macro environment, customers are “more measured” in their purchasing decisions, prompting Salesforce to make the “very difficult decision” to lay off employees.
“I’ve been thinking a lot about how we got to this moment,” he said. “As our revenue accelerated from the pandemic, we hired too many people, leading to this economic downturn that we are now facing, and I take responsibility for that.”
Salesforce will see costs of $1.0 billion to $1.4 billion related to workforce reductions and $450 million to $650 million related to office space reductions, the company said.
Salesforce shares are up almost 3% on Wednesday.
The cuts mark the latest round of departures at the cloud-based software company, San Francisco’s largest private employer. The company laid off fewer than 1,000 employees in November. Later that month, Bret Taylor announced his plan to step down as co-CEO on January 1st. 31, leaving Marc Benioff alone again at the helm of the company he co-founded in 1999.
In the three trading days after Taylor’s news landed alongside Salesforce’s third-quarter earnings report, the stock had two of its three worst days of 2022, plummeting 8.3% and 7.4%, respectively.
Days later, the company announced the departure of Slack CEO Stewart Butterfield, who joined Salesforce in its largest acquisition ever.
Salesforce has aggressively hired during the pandemic. At the end of January 2022, it employed 73,541 people. A December filing said headcount had increased by 32% since October 2021 “to meet increased demand for services from our clients.”
Now, like many other big tech companies, Salesforce is trying to cut costs as it grapples with slower revenue growth and a flagging economy. Days after Twitter’s new boss, Elon Musk, laid off half of his company’s workforce, Facebook’s parent company Meta announced its most significant round of layoffs yet, cutting 13% of its workforce. Amazon, Lyft, HP and DoorDash also announced significant job cuts.
Salesforce expects to complete the workforce restructuring by the end of fiscal 2024 and the real estate restructuring by fiscal 2026.
— CNBC’s Jordan Novet contributed to this report.