Employment Slump Continues in New Year... Salesforce to Lay Off 10% of Workforce

[Asia Economy New York=Special Correspondent Joselgina] Salesforce announced a restructuring plan to cut 10% of its total workforce from the beginning of the year, continuing the tech-driven employment freeze into the new year.

The world's largest customer relationship management (CRM) software company, Salesforce, revealed on the 4th (local time) through a filing with the U.S. Securities and Exchange Commission (SEC) that it plans to lay off 10% of its total workforce and downsize offices in some regions. This decision for additional layoffs came just a few months after cutting about 1,000 employees last November.

[Image source=Reuters Yonhap News]

Mark Benioff, Salesforce CEO, explained the background of the restructuring decision in a letter to employees, stating, "The business environment is challenging, and customers are approaching purchasing decisions more cautiously due to the difficult macroeconomic conditions." He added, "During the pandemic period, revenue accelerated, and we hired too many employees. I take responsibility for that." As of December last year, Salesforce's workforce stood at 79,000.

The restructuring measures will be carried out over the coming weeks. Accordingly, Salesforce estimates costs of $1 billion to $1.4 billion for layoffs and $450 million to $650 million for office downsizing. Of this, approximately $800 million to $1 billion is expected to be reflected in the fourth quarter of the fiscal year.

Recently, Salesforce's management uncertainty has increased as key executives have left one after another. Following the resignation of co-CEO Bret Taylor after one year, Stuart Butterfield, CEO of subsidiary Slack, will also leave the company this month.

In the U.S., as recession warnings grow louder, restructuring moves such as layoffs are continuing mainly among tech companies. Earlier, Meta, the parent company of Facebook, announced the largest-ever layoff by cutting 13% of its employees. Amazon, Lyft, HP, DoorDash, and others have also formalized workforce reductions. While employment indicators in the U.S. still show a robust level, analyses suggest that the employment freeze warning on the ground is rising sharply.

Meanwhile, following the announcement of these restructuring measures, Salesforce's stock price on the New York Stock Exchange this afternoon is trading at around $138.75 per share, up 2.91% from the previous close.