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Salesforce to chop 10% of workforce in $1.4 billion restructuring blueprint

CRM specialist to 'reduce operating costs, improve operating margins' as pandemic catches up with tech industry

Salesforce has announced drastic restructuring plan to cut 10 percent of its workforce at a cost of around $1.4 billion to $2.1 billion.

The CRM giant employs around 73,000 people, so the restructuring plan announced to the US Securities and Exchange Commission [PDF] this morning could see 7,000 jobs go. Meanwhile, the SaaS specialist plans "select real estate exits and office space reductions within certain markets."

The announcement said the plans were "intended to reduce operating costs, improve operating margins, and continue advancing the Company's ongoing commitment to profitable growth."

Salesforce estimated the plans would cost between $1.4 billion to $2.1 billion in charges, with $800 million to $1 billion scheduled to fall in the company's fourth quarter of fiscal 2023, which ends in March. The costs break down into $1 billion to $1.4 billion for staff layoffs and $450 million to $650 million in office space exit charges.

Job losses are expected to be "substantially complete" by the end of the Salesforce's financial year, subject to local law and consultation requirements.

In a letter to Salesforce staff, CEO Marc Benioff, said the company's business environment "remains challenging and our customers are taking a more measured approach to their purchasing decisions."

"With this in mind, we've made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks," 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," he said.

The employee base grew from 35,000 in 2019 to 49,000 in 2020, and 56,000 in 2021. Additions last year took the count above the 70,000 mark.

Benioff promised those set for the chop a "generous package." For example, US employees would get a minimum of nearly five months of pay, health insurance, career resources, and other benefits to help with their transition, the letter said.

Early signs of job losses at the software company started with a trickle. In November 2022, it announced plans to lay off hundreds of workers, less than 1 percent of the workforce.

Salesforce also unwound its CEO job share arrangement, with co-CEO Bret Taylor announcing he will leave the company in January 2023 – leaving Marc Benioff occupying the one remaining big chair. Other senior execs departing include chief strategy officer Gavin Patterson, Slack founder and CEO Stewart Butterworth, and Tableau CEO Mark Nelson.

Following Salesforce's Q2 results, Benioff said sales cycles were getting stretched as customers took a more measured approach to deals.

Salesforce is not alone in the Big Tech layoffs sending jitters through the professional community. Meta is laying off 13 percent or 11,000 employees and Google is under fire from a large institutional investor that wants management to make employees more productive while paying less them less. Amazon is expunging 10,000 people. ®

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