Salesforce announces 10% of workforce due to over-hiring during the pandemic

Salesforce has plans to cut 10% of its workforce as well as close down some of its offices, according to a memo sent out recently. The move comes following a slew of hires during the pandemic that led to a glut in the workforce during the economic downturn.

On 4 January 2022, the firm said that job cuts would lead to US$1.4 billion to US$2.1 billion in charges. In a letter to the employees of Salesforce, the company's co-CEO, Mark Benioff said, "The 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%, mostly over the coming weeks."

He also took responsibility for hiring too many people leading into the economic downturn. Benioff added, “For those who will be leaving Salesforce, our priority is to fully support them, including by offering a generous package”.

In the US, affected employees will receive a minimum of nearly five months of pay, health insurance, career resources, and other benefits to help with their transition. Those outside the US will receive a similar level of support in alignment with employment laws, said Benioff. “The employees being affected aren’t just colleagues. 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,” he added.

Along with Salesforce Inc, other companies have also carried out major job cuts in preparation of the upcoming recession, a consequence of hikes in interest rates by global banks in order to curb inflation. Reuters reports that during this economic downturn, businesses that used cloud systems during the pandemic are now actively trying to pull new projects which has in turn affected the business of companies like Salesforce. The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions," Benioff said in the same letter. 

According to a press statement by Salesforce, the company had nearly 80,000 employees at the end of the third quarter which was a nearly 14% rise from the previous quarter. Salesforce justified this rise in employment rate in its quarterly filing, stating that they did so in order to “meet higher demands for services.”

Salesforce shut down its Hong Kong office last August, as it was expanding its customer relationship management software in China. In a conversation with MARKETING-INTERACTIVE, Salesforce's spokesperson said the company is accelerating its strategic partnership with Alibaba, and as a result it is optimising its business structure to better serve the Greater China region. "We are opening new roles while eliminating some others. We look forward to continuing to serve our customers in Greater China and helping to drive their success," the spokesperson added.

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