Salesforce Inc. plans to lay off about 10% of its staff as part of a restructuring plan, Market Watch reports.
The company will also divest some real estate and cut back on office space. The goal of the plan is to reduce operating costs, increase operating margins and drive “profitable growth.”
Salefforce CRM, +3.57% joins a number of other tech companies that have admitted in recent months that they have grown too fast for the current environment.
“As our earnings accelerated during the pandemic, we hired too many people, leading to the economic downturn we now face, and I take responsibility for that,”
co-CEO Mark Benioff said in a letter to employees that was also filed with the Securities and Exchange Commission.
On investor day in September, the company had about 80,000 employees.
Salesforce expects that it will incur $1.4-2.1 billion in expenses related to the plan, of which $800-1 billion is expected to be incurred in the fourth quarter of fiscal 2023, which is underway. The majority of the total expected spending is related to employee transition, layoffs, employee benefits or stock-based compensation, Market Watch writes.
The company anticipates that it will be done with the staffing elements of the restructuring plan by the end of fiscal 2024 and done with the real-estate efforts during fiscal 2026.
Mizuho’s Jordan Klein, a desk-based analyst associated with the sales team and not the research unit, said in a note that the restructuring was a positive step toward helping to “rebuild investor credibility and trust and one that showed that Benioff “is not all about growth at any cost.