Salesforce to lay off 8,000 workers in latest tech purge End-shutdown

Business software maker Salesforce is laying off about 8,000 employees, or 10% of its workforce, as major technology companies continue to cut payrolls that expanded rapidly during the pandemic lockdown.

The cuts announced Wednesday are by far the biggest in the 23-year history of a San Francisco company founded by former Oracle executive Marc Benioff. Benioff pioneered the method of leasing software services for Internet-connected devices, a concept now known as “cloud computing.”

The layoffs are coming on the heels of a reorganization at the top of Salesforce. Benioff’s handpicked co-CEO Bret Taylor, who was also Twitter’s chairman at the time of its devious $44 billion sale to billionaire Elon Musk, left Salesforce. Then Slack co-founder Stewart Butterfield left. Salesforce bought Slack two years ago for nearly $28 billion.

Salesforce workers who lose their jobs will receive nearly five months of salary, health insurance, career resources and other benefits, according to the company.

Benioff, now the sole CEO of Salesforce, told employees in a letter that he blamed himself for the layoffs after continuing to hire aggressively during the pandemic, with millions of Americans working from home and demanding the rise of technology. of the company.

“As our revenue accelerated during the pandemic, we hired too many people which led to this economic downturn we are now facing, and I take responsibility for that,” Benioff wrote.

Salesforce employed about 49,000 people in January 2020, just before the pandemic struck. The Salesforce workforce today is still 50% larger than it was before the pandemic.

Meta Platforms CEO Mark Zuckerberg also acknowledged that he misrepresented the revenue gains the Facebook and Instagram owner was reaping during the pandemic when he announced in November that his company would lay off 11,000 employees, or 13% of its workforce. E-commerce giant Amazon and a wide range of other companies have also been laying off thousands of workers in recent months after expanding too aggressively during the pandemic.

Like other big tech companies, Salesforce’s recent slump following the heady days of the pandemic has had a major impact on its shares. Prior to Wednesday’s announcement, shares had plunged more than 50% from their November 2021 high near $310. Shares gained nearly 4% on Wednesday.

“This is a smart poker move by Benioff to preserve margins against an uncertain backdrop, as the company has clearly outperformed its organization in recent years along with the rest of the tech sector with a slowdown now on the horizon,” the analyst said. of Wedbush, Dan Ives. he wrote.

Salesforce also said Wednesday that it will close some of its offices, but did not list locations. The company’s 61-story headquarters is a prominent feature of the San Francisco skyline and a symbol of the importance of technology to the city since its completion in 2018.

Salesforce anticipates incurring costs of $1.4 billion to $2.1 billion to carry out its cuts. That includes $1 billion to $1.4 billion in fees tied to employee transition, severance pay, employee benefits and stock-based compensation. There will be $450 million to $650 million in office closing charges. Charges of approximately $800 million to $1 billion are expected to occur in Salesforce’s fiscal fourth quarter ending January 31.

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