Cloud-based software company, Salesforce, has announced plans to layoff approximately 10% of its staff and close some offices. This move will cost Salesforce between $1.4 billion and $2.1 billion. The company attributed the layoffs and office closures to an economic slowdown and a bloated workforce resulting from rapid pandemic hiring.
Earlier this week, TechCity reported a second tranche of layoffs at Amazon with more tech companies announcing a cut in their workforce every other week. Salesforce is the latest to make this announcement.
In a letter to employees, Salesforce’s CEO, Marc Benioff admits that the company hired too many people leading into the current economic downturn and that customers are taking a more measured approach to purchasing decisions.
Salesforce had around 80,000 employees at the end of the third quarter of 2022, up from about 70,000 in 2021. The company explained in its quarterly regulatory filing that it increased headcount “to meet the higher demand for services” during the pandemic.
Apart from a bloated workforce, several other factors have contributed to the challenging environment faced by Salesforce and other companies.
Many businesses that relied on cloud services during the pandemic are now looking to reduce expenses and are delaying new projects.
In addition, companies such as Salesforce and Microsoft have been impacted by ridiculously high interest rates enforced by global central banks in an effort to curb inflation, which has led to fears of a recession.
Despite these challenges, Salesforce experienced a 3% increase in its stock price this week and the company remains confident in its long-term growth prospects.
In a statement, the company said it is “focused on driving efficiency and effectiveness across the business, while investing in the key growth areas of the future.”
Salesforce also announced that it plans to continue hiring in its research and development, sales, and customer success departments.
