Salesforce to fire 10% of its employees as tech layoffs continue
“We hired too many people leading into this economic downturn we’re now facing.”
Salesforce announced Wednesday it is laying off 10 percent of its over 70,000 employees. In a filing with the Securities and Exchange Commission (SEC), Salesforce said it plans to reduce headcount, scale back on real estate, and slash office space in certain markets. The company currently has 73,541 employees, according to the latest SEC filings.
The global economic downturn that started in the second quarter of 2022 is beginning to have a major impact on tech companies. As we reported last year, at least 140,000 tech workers have lost their jobs, according to Layoffs.FYI, a site that has been tracking all tech layoffs using data compiled from public reports.
Salesforce is the latest in a series of tech companies to announce layoffs amid recession threats and global slowdown. Last year, tech companies including Meta, and Twitter reduced their headcount and slowed hiring as global economic growth weakens due to looming recession, inflation, higher interest rates, the energy crisis in Europe, and the ongoing war in Ukraine.
Meanwhile, Salesforce also announced a broad restructuring plan “intended to reduce operating costs, improve operating margins, and continue advancing the Company’s ongoing commitment to profitable growth.” The filings also revealed that the total costs of the restructuring are expected to be “approximately $1.4 billion to $2.1 billion,” of which about $800 million to $1 billion is expected to be incurred in the 4Q23.
“These charges consist primarily of $1.0 billion to $1.4 billion in charges related to employee transition, severance payments, employee benefits, and share-based compensation; and $450 million to $650 million in exit charges associated with the office space reductions. Of the aggregate amount of charges that the company estimates it will incur in connection with the Plan, the company expects that approximately $1.2 billion to $1.7 billion will be in future cash expenditures,” SEC filing shows.
Also included in the SEC filing was a letter by Chief Executive Officer Marc Benioff addressed to employees that read:
Letter to Employees
Date: January 4, 2023
Subject: Important Company Update
As one ‘Ohana, over the last 23 years, Salesforce has built the #1 CRM that drives incredible customer success across every line of business for every industry around the world. We have never been more mission-critical to our customers. We have an unparalleled ecosystem, with thousands of partners and millions of Trailblazers building their companies on our platform.
However, the environment remains challenging and our customers are taking a more measured approach to their purchasing decisions. With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.
I’ve been thinking a lot about how we came to this moment. 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.
Within the next hour, employees who are initially affected by this decision will receive an email letting them know. Our leadership will reach out directly to these employees, and provide clarity for their teams about changes within their organizations.
For those who will be leaving Salesforce, our priority is to fully support them, including by offering a generous package. In the U.S., affected employees will receive a minimum of nearly five months of pay, health insurance, career resources, and other benefits to help with their transition. Those outside the U.S. will receive a similar level of support, and our local processes will align with employment laws in each country.
The employees being affected aren’t just colleagues. They’re friends. They’re family. Please reach out to them. Offer the compassion and love they and their families deserve and need now more than ever. And most of all, please lean on your leadership, including me, as we work through this difficult time together.
I’m grateful for every single one of you who has contributed to our continued success as a company, and the hard work and sacrifices you have made to generate success for our hundreds of thousands of customers. You’ve built our company — for all of our stakeholders — and you’ve shown incredible resilience every step of the way.