Salesforce Inc. announced that it would close certain offices and lay off roughly 10% of its staff, affecting over 7,000 employees, making it one of the recent tech companies to make cost-cutting measures in the face of a slowing economy.
Marc Benioff, co-CEO, wrote to the employees that it is challenging for the company as clients are making more “measured purchasing decisions.” He expects the move to save up to US$1.4b to US$2.1b in charges in Q4 2023.
The Salesforce layoffs have also stemmed from a rapid ‘hiring phase” that the company claims to have gone through. Benioff added that the company hired over 79,000 employees in February 2022 alone.
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He said, “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”
The previous year witnessed several big companies planning or announcing layoffs to cut costs amidst uncertain market conditions, recurring COVID scares, and worldwide recession. The anticipated worldwide recession results from interest rate hikes by several global central banks trying to curb inflationary pressures in the respective countries.
Many other companies have also laid off massive chunks of their workforce, including Meta, Datarobot, Amazon, and many others. In fact, Salesforce laid off over 2500 employees in November 2022 due to product challenges and sales performance.