Salesforce plans to cut 10 per cent of its workforce as the software group restructures its business to navigate a slowdown in consumer demand, the company announced on Wednesday.
The group, which had just shy of 80,000 employees at the end of October, announced a new restructuring plan intended to reduce operating costs and improve operating margins. Cost controls will also include cutting office space in certain markets.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” co-chief executive Marc Benioff said in a letter to employees on Wednesday.
“With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 per cent, mostly over the coming weeks.”
Although the company’s revenue “accelerated” through the pandemic, Benioff said Salesforce hired too many people leading into the economic downturn.
Salesforce already cut hundreds of employees in November last year.
Employees affected by the move received an email this morning informing them of the company’s decision. These employees will receive a “generous package”, with US staff receiving a minimum of nearly five months of pay, health insurance, career resources and other benefits. Employees outside of the US would receive a “similar level of support”, said Benioff.
Salesforce expects to incur between $1.4bn and $2.1bn in charges associated with its new restructuring plan. Around $1bn to $1.4bn of the charges are expected to be related to employee transition, severance payments, employee benefits and share-based compensations.
Exit charges from reducing office space are forecast to be between $450mn and $650mn.
The company anticipates that approximately $1.2bn to $1.7bn of the aggregate amount of charges will be in future cash expenditures.
The employee restructuring is expected to be “substantially” complete by the end of the company’s fiscal 2024 year.
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2023-01-04 15:57:09
