Author: Victory Robins
Salesforce, one of the world’s largest software companies in the world, has announced plans to cut up to 10% of its global workforce to reduce costs amid broader tech layoffs.
The company has moved as it aims to focus on core businesses and cost-saving initiatives while coping with the economic downturn caused by the Covid-19 pandemic.
This article will explore the impact of Salesforce’s move and what it could mean for the tech sector’s future.
Salesforce to cut 10% of workforce because of broader tech layoffs
Nearly 8,000 workers which are 10% of Salesforce’s staff, will be laid off. In addition, it intends to downsize its office space as software firms cut expenses amid economic worries.
CEO Marc Benioff said in a message to staff on Wednesday that they made this decision as customers become more careful spenders due to the difficult economic environment. “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,” according to Benioff.
The software giant stated in a regulatory filing that it anticipates charges related to the reorganization plan to range between $1.4 billion and $2.1 billion. Additionally, up to $1 billion will be in the current quarter.
According to Benioff, most layoffs will occur in the upcoming weeks. Employees impacted in the US will receive at least five months’ worth of income, medical insurance, and other compensation. The company has recently announced mass layoffs, and this is the most recent wave.
As of October 31st, Salesforce employs 79,824 workers. According to the company’s economic statistics, this is higher than the 47,000 during the same month in 2019. According to reports, the corporation fired hundreds of employees in November.
Nevertheless, shares of Salesforce increased by more than 4% recently.
Do any tech layoffs take place?
Several tech firms, including Salesforce, have reported layoffs or other cost-cutting initiatives. This took place because worries about future economic recession increased.
Recently, Vimeo, a streaming video platform, also announced that it would fire 11% of its employees.
“We are entering 2023 with a more focused strategy to simplify Vimeo, and ultimately, our team size and composition need to reflect that focus,” according to Vimeo CEO Anjali Sud in her statement to employees. “This reduction enables us to achieve our growth and profitability goals in a way that is far less dependent on the broader market, putting us in full control of our destiny.”
The Bottom Line
The Covid-19 pandemic has shaken the tech sector, leading to layoffs and cost-cutting initiatives. Salesforce’s announcement of its plan to cut up to 10% of its global workforce is an impact of the pandemic on the industry. While this move may seem drastic, it can help the company focus on core businesses and cost-saving initiatives, enabling it to control its destiny in the long run. To learn more about the effects of the pandemic on the tech sector and what other companies are doing to cope with the economic downturn, stay tuned to our blog for the latest updates.