Salesforce to cut about 10% of workforce | CNN Business

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Salesforce said on Wednesday it will cut about 10% of its workforce and reduce its real estate footprint, making it the latest tech company to cut costs as broader economic uncertainty continues to weigh heavily on Silicon Valley.

In a letter to employees announcing the job cuts, Marc Benioff, president and co-CEO of Salesforce, admitted that the number of employees has increased too much before the pandemic and said that most of the cuts will occur over the next few weeks.

“I’ve been thinking a lot about how we got to this point,” Benioff wrote. “As our revenue accelerated through the pandemic, we hired too many people that led to this economic downturn we’re facing now, and I take responsibility for that.”

As of January 2022, Salesforce reported a global employee count of 73,541.

The tech sector, which was initially driven by a sudden and intense pandemic-fueled shift to online services, has since had to contend with consumers returning to their offline lives. At the same time, the industry has been hit by a seemingly perfect storm of economic factors over the past year, including rising interest rates, fears of a looming recession and consumers and businesses rethinking spending .

Like Benioff, a number of other tech founders and CEOs have since admitted that they failed to accurately measure pandemic demand. As a result, tech companies like Amazon and Meta have announced company-wide layoffs.

Dan Ives, an analyst at Wedbush Securities, wrote in an investor note on Wednesday that the cloud computing giant “is clearly seeing headwinds in the field and is therefore trying to quickly adapt to a demand environment softening”. The analyst added that the company “has clearly outperformed its organization over the past few years along with the rest of the technology sector.”

Shares of Salesforce ( CRM ) rose more than 3% in early trading Wednesday after the announcement.

Like other tech companies, Salesforce’s stock suffered steep declines last year. Against this backdrop, Salesforce made a significant change in its C-Suite: Co-CEO and Vice President Bret Taylor said he would leave his positions at the company at the end of January.

In his letter Wednesday, Benioff said affected employees in the U.S. “will receive a minimum of nearly five months’ pay, health insurance, professional resources and other benefits to help them with their transition.” Those outside the United States “will receive a similar level of support,” Benioff wrote.

“The affected employees are not just colleagues,” Benioff said. “They are friends. They are family. Please contact them. Offer the compassion and love that they and their families deserve and need now more than ever. And above all, please lean on your leadership, including me, as we work together through this difficult time.”