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Salesforce to Dismiss 10% of Workforce after Hiring ‘Too Many People’ during Pandemic
In the wake of tech companies cutting expenses, software company Salesforce Inc (NYSE: CRM) has revealed plans to cut 10% of its workforce. The cloud-based company also intends to shut down some offices in specific locations in addition to firing thousands of staff. In a letter to employees, Salesforce CEO Marc Benioff referred to the challenging environment as the reason to dismiss the workers over the coming weeks. The impacted employees are more than 7,000. The CEO added that Salesforce “hired too many people” during the pandemic, which has led to the company’s economic downturn.
As of February 2022, Salesforce said it had more than 79,000 workers globally, representing a 30% growth since the same time in 2022. Salesforce was one of the many tech companies that benefited from the coronavirus pandemic. The company’s revenue spiked as the world was forced to stay home and rely heavily on technology to connect with other people remotely.
Salesforce to Cut 10% of Workforce
The software company said it would contact impacted workers, and affected teams would receive clarity on organizational changes. Also, the workforce cut will result in around $1.4 billion to $2.1 billion in charges, while only about $800 million to $1 billion will be recorded in Q4. According to the CEO, the dismissed staff will receive full support from the team, including “a generous package.”
“In the US, 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 US will receive a similar level of support, and our local processes will align with employment laws in each country.”
Salesforce announcing a workforce cut four days into the new year indicates the economic headwinds companies have been warning about. Technology giants like Amazon (NASDAQ: AMZN) and Meta Platforms (NASDAQ: META) fired thousands of workers last year ahead of a possible recession. Investors are already wary of more bad times for the economy due to central banks’ continued interest rate hikes to control inflation. At the same time, many companies that resorted to cloud services amid the stay-home period are beginning to reduce expenses, affecting the likes of Salesforce and Microsoft (NASDAQ: MSFT).
Wedbush analysts Dan Ives wrote about the workforce reduction at Salesforce. The analysts said the cloud-based company “clearly is seeing headwinds in the field and thus is trying to quickly adjust to a softening demand environment.”
In addition to growing more than 5% in the last five days, Salesforce stock also jumped 7.27% over the past month. At press time, CRM is down 0.03% to $139.55.
Salesforce to Dismiss 10% of Workforce after Hiring ‘Too Many People’ during Pandemic