Shulou(Shulou.com)11/24 Report--

Salesforce, the largest CRM software service provider in the United States, announced a restructuring plan on Wednesday, including layoffs of 10%, closing some offices and selling some real estate projects. Salesforce's CEO acknowledged that he was responsible for hiring too many people because of the surge in revenue during the epidemic.

Salesforce had 79,000 employees worldwide as of October 31, 2022, according to company filings. A 10% layoff means more than 7000 employees will lose their jobs. As of January 31, 2020, the company had approximately 49,000 employees.

Salesforce co-CEO Marc Benioff said in a letter to employees: "Customers are becoming more cautious in making purchasing decisions given the challenging macroeconomic environment. A growing number of software companies say they have been facing this trend lately. This led Salesforce to make the difficult decision to lay off employees. "

Benioff, who is also Salesforce's chairman, said: "I've been thinking about how we got here. As revenue soared during the pandemic, we hired too many people, which led to our current predicament, and I need to take responsibility for that. "

Benioff said most of Salesforce's layoffs are expected to occur in the coming weeks. The company disclosed its restructuring plan Wednesday in a filing with the Securities and Exchange Commission. Salesforce said the layoff plan would incur an expense of about $1.4 billion to $2.1 billion, with the current quarterly expense peaking at $1 billion.

Salesforce actively recruited during the first two years of the outbreak, as many companies adopted Salesforce software products. Salesforce also has employees telecommuting, but it remains operational. During the epidemic, the company also acquired Slack Technologies, a workplace instant messaging app.

Salesforce and other cloud services companies have warned recently, however, that sales are slowing, citing pressure on customers to cut spending due to inflation and other economic issues. Amazon and Microsoft, the world's two largest cloud computing providers, also said demand for cloud computing services had slowed as customers looked to cut bills. Both companies also announced belt-tightening.

Salesforce has seen several executives leave in recent months, including co-CEO Bret Taylor and Stewart Butterfield, CEO and co-founder of Slack Technologies.

Salesforce expects the employee restructuring plan to be largely complete by the end of fiscal 2024 and the real-estate restructuring to be completed by fiscal 2026. Salesforce aspires to higher margins through more efficient spending strategies. In September, Salesforce management projected an adjusted operating margin of 25% for fiscal 2026, compared to 22.7% in the previous quarter.

Analysts led by Piper Sandler's Brent Bracelin rated Salesforce stock the equivalent of a "buy," estimating in a research note to clients that the spending cuts could reduce Salesforce's operating expenses by more than $1.5 billion a year and expand the company's operating margin from 21% to 26%. But that assumption assumes "demand drivers remain constant," analysts write, but is clearly unlikely.

William Blair analyst Arjun Bhatia said: "Salesforce is certainly not the only company facing difficult layoffs in a clearly weak demand environment over the past 12 months that will put Salesforce in a good position to meet its FY2026 target of 25% operating margin, but the macro context may pose a risk to its revenue target. "

Corporate apologies for overhiring have become a recurring new phenomenon in the tech world in recent months, as executives realize that some of the hiring they did early in the epidemic to meet soaring demand for digital products has led to today's overstaffing as business conditions deteriorate.

Facebook parent company Meta CEO Mark Zuckerberg apologized last year for overhiring, but the company still announced 13% layoffs. A few days ago, Twitter co-founder Jack Dorsey also expressed remorse after the company's new boss Elon Musk announced about 50 percent job cuts.

Vimeo, a New York-based video-sharing platform, said Wednesday it had decided to lay off an additional 11 percent of its workforce after laying off 6 percent in July. Anjali Sud, chief executive, said that in addition to further deterioration in economic conditions,"we also have a better understanding of where post-epidemic demand is going and how this will affect short-term growth."

Fyi, an agency that tracks layoffs, says tech companies cut more than 150,000 jobs throughout 2022.

Salesforce shares rose 3.6 percent Wednesday, but the stock has fallen nearly 46 percent over the past 12 months.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.