Business software giant Salesforce said on Wednesday it plans to lay off 10 percent of its workforce, or about 8,000 employees, and scale back office space due to concerns about the economy.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” the company’s co-CEO, Marc Benioff, said in a note to employees announcing the cuts.
Salesforce’s revenue, like that of many other tech companies, has exploded during the pandemic, as more people worldwide are working from home and relying more on technology to collaborate with colleagues remotely. In his letter, Mr Benioff suggested that the company was recruiting too aggressively at the time.
Salesforce employed just under 80,000 employees at the end of October, compared to about 48,000 three years ago.
“We’ve recruited so many people that led to this economic crisis we’re facing right now, and I take responsibility for that,” said Mr Benioff.
A Salesforce spokesperson said the company has not commented further on the cuts.
The layoffs turned the tech industry slowdown into even more stark relief. Tech giants like Amazon have slowed hiring and cut jobs in recent months, while smaller companies like Lyft and Stripe have announced layoffs. Many of the industry’s biggest firms have stubbornly reported financial results that show they are feeling the effects of high inflation and rising interest rates.
Social media companies have struggled with a backlash, especially in digital advertising. Meta, which owns Facebook and Instagram, laid off 13 percent of its employees in November and said headcount will remain “roughly stable” through the end of this year. Snapchat’s parent company Snap laid off 20 percent of its employees in August, blaming tough macroeconomic conditions. Elon Musk, who bought Twitter for $44 billion in October, cut the company’s workforce by more than half.
Salesforce’s sales increased 14 percent in the last quarter, the slowest pace in years; predicted even slower growth in the current quarter. Other tech chiefs, like Meta’s Mark Zuckerberg, recently admitted that they hired too many people in a hurry to cut back. More than 150,000 tech workers were laid off last year, according to Layoffs.fyi, a site that tracks layoffs.
Salesforce’s cuts come with the departure of some of its executives. In November, the company’s co-CEO, Bret Taylor, announced that he would step down and leave at the end of this month. In December, Stewart Butterfield, CEO of Slack, a workplace communications platform owned by Salesforce, also said he would step down by the end of this month. Salesforce bought Slack for $27.7 billion in 2020.
Salesforce is the largest private employer in San Francisco, and its flagship office building is the tallest building in the city.
The company estimates the changes will cost $2.1 billion. Mr Benioff said Salesforce offers US employees at least five monthly salaries, as well as health insurance and career resources. He wrote that most of the cuts will come “in the coming weeks”.
Shares of Salesforce rose more than 4 percent in premarket trading Wednesday. The company’s stock price has dropped nearly 50 percent last year.