(Bloomberg) — Salesforce Inc. said it would cut about 10% of its workforce after the enterprise software company hired too many people in the lead up to the economic downturn and customers became more cautious with spending.
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The company, which has about 80,000 employees, said in a regulatory filing on Wednesday that it aims to complete the workforce restructuring by the end of fiscal 2024 and real estate reductions in fiscal 2026.
The software giant is under pressure from investors including activist Starboard Value to improve margins. Meanwhile, it has projected the slowest revenue growth for the current quarter since going public in 2004 and has seen top executives Co-Chief Executive Officer Bret Taylor and Slack Chief Executive Officer Stewart Butterfield announce their departures.
Read more: Marc Benioff Is Alone Atop Salesforce After Bret Taylor’s Exit
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Chief Executive Officer Marc Benioff said in a letter to employees on Wednesday. “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.”
Shares rose about 2.8% in premarket trading before exchanges opened in New York. The stock had declined 47% in the 12 months through Tuesday.
Salesforce, the largest private-sector employer in its hometown of San Francisco, has almost tripled its workforce in the past five years, in large part through dozens of acquisitions. It previously cut hundreds of workers concentrated in sales teams in November.
Benioff said in the letter that many of the affected employees would be notified within the “next hour” and will receive a minimum of about five months of pay, health insurance, career resources, and other benefits. Those outside the US will receive a similar support aligned with local employment laws, the letter said.
The reductions will cost Salesforce $1.4 billion to $2.1 billion, the company said. As much as $1 billion of that will come in the fourth quarter of fiscal 2023.
Read More: Twenty Tech Firms Cutting Jobs as They Cope With Slowdown
Headcount reductions have roiled the tech industry in recent months with the likes of Meta Platforms Inc., Amazon.com Inc., Twitter Inc., HP Inc. and Seagate Technology Holdings Plc. announcing thousands of cuts in recent months.
(Updates with additional background throughout)
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