Salesforce Inc, the cloud-based business software giant, announced Wednesday that it will cut approximately 10% of its workforce and reduce its number of offices amid economic concerns in Silicon Valley and a bloated workforce resulting from its pandemic-era rapid hiring practices.
Marc Benioff, Saleforce’s chair and co-CEO, admitted in a letter to employees to hiring “too many people” during the pandemic, and stated that the job cuts–which will impact around 8,000 jobs–will take place over the course of the next few weeks. As of January 2022, Salesforce reported a headcount of 73,541 global employees.
“I’ve been thinking a lot about how we came to this moment,” Benioff wrote in the letter. “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.”
Salesforce is among the latest in a series of tech companies facing difficult decisions in the face of an uncertain economy. Companies from Meta Platforms Inc. to Amazon Inc have slashed thousands of jobs in the past year, in preparation for a recession as global central banks continue to aggressively spike interest rates to curb inflation.
Additionally, businesses that relied on cloud services during the pandemic are now trying to cut costs and are delaying future projects, hurting companies such as Salesforce and Microsoft Corp. Combined with the fact that pandemic-driven consumer interest in tech has ebbed as people return to their offline lives, Salesforce and its Silicon Valley contemporaries have been struggling to find ways to keep up.
Dan Ives, an analyst at Wedbush Securities, wrote in an investor note Wednesday that Salesforce “clearly is seeing headwinds in the field and thus is trying to quickly adjust to a softening demand environment.” The analyst added that the company “clearly overbuilt out its organization over the past few years along with the rest of the tech sector.”
“The employees being affected aren’t just colleagues,” said Benioff in his letter. “They’re friends. They’re family. Please reach out to them. Offer the compassion and love they and their families deserve and need now more than ever. And most of all, please lean on your leadership, including me, as we work through this difficult time together.”