Salesforce To Lay Off 7,000 Employees: ‘Hired Too Many People’
‘We’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks,’ said Salesforce Co-CEO Marc Benioff in a letter to employees Wednesday.
Salesforce Co-CEO Marc Benioff revealed Wednesday that his company will be laying off around 7,000 employees over the next few weeks due to hiring too many employees during the COVID-19 pandemic.
“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,” said Benioff in a letter to employees that was filed Wednesday with the U.S. Securities and Exchange Commission.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Benioff said. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.”
The San Francisco-based company had over 73,500 employees in early 2022, which was an increase of 30 percent compared with 2021.
[Related: Salesforce Cuts 90 Recruiters Amid Hiring Slowdown]
Salesforce Employees To Receive $1 Billion To $1.4 Billion
Salesforce said it expects between $1 billionand $1.4 billion in charges due to employee layoffs, including employee transition, severance payments, employee benefits and share-based compensation plans.
The company projects about $800 million to $1 billion will be generated in its current fourth quarter.
More than half of Salesforce employees are based in the U.S.
“Employees who are initially affected by this decision will receive an email letting them know,” said Benioff Wednesday. “Our leadership will reach out directly to these employees and provide clarity for their teams about changes within their organizations.”
Salesforce Closing Offices
In addition to the massive layoffs, Salesforce said it will “select real estate exits and office space reductions” within certain markets, according to a separate SEC filing Wednesday.
These office closures are expected to be fully complete in fiscal year 2026, Salesforce said.
The overall goal of the office closures and the employee cuts is to reduce operating costs, improve operating margins and continue advancing the commitment to profitable growth.
“The employees being affected aren’t just colleagues. They’re friends. They’re family. Please reach out to them,” said Benioff. “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.”
IT Layoffs
The IT industry has saw a massive number of layoffs in 2022—including Intel, HP Inc., Microsoft, Twilio and Nutanix, to name a few.
Some of the technology companies, similar to Salesforce, cited hiring too many people over the past few years during the COVID-19 pandemic as the reason for the layoffs.
For example, San Francisco-based customer engagement platform company Twilio laid off 11 percent of its workforce, or about 850 employees.
“Twilio has grown at an astonishing rate over the past couple years. It was too fast, and without enough focus on our most important company priorities,” said Twilio CEO Jeff Lawson in September.
Other IT companies are laying off employees due to underperforming sales. Last month, HP Inc. said it will eliminate between 4,000 and 6,000 employees by 2025 after reporting a fourth-quarter 2022 sales drop of over 11 percent year over year.