Before the planned savings come into play, management expects costs of around $1.4 billion to $2.1 billion.
(Photo: Reuters)
Berlin The US software group Salesforce is reacting to the poor economic situation with mass layoffs. The rival of the Dax group SAP announced on Wednesday that it would cut every tenth job. And that already in the next few weeks.
A total of almost 8,000 employees are likely to lose their jobs. Even after the final report for the 2022 financial year, the company reported more than 79,000 employees in February. Salesforce offers cloud solutions for customer relationship management (CRM) to companies.
The San Francisco-based company also said it would sell real estate and downsize office space in some markets. It was initially unclear to what extent Germany was affected by the plans. A spokeswoman could not comment on this.
Large amounts for severance payments flow into the balance sheet
Salesforce, which has been growing rapidly for a long time, has been in a leadership crisis for months. It was not until the end of November that co-head Bret Taylor surprisingly announced his retirement and left the management completely to company founder Marc Benioff. Taylor was considered a promising individual candidate to succeed Benioff at the helm.
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In a letter to the workforce, Benioff justified the layoffs with too many hirings during the corona pandemic: “I take responsibility for that,” the letter says. In view of the economic downturn, the workforce had to be reduced. “The environment remains challenging and our customers are making more informed purchasing decisions.”
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Before the planned savings can take effect, Salesforce must first shoulder costs of around 1.4 to 2.1 billion US dollars (1.3 to 2 billion euros). Most of the expenses relate to severance payments.
Those affected in the USA should receive at least five months’ salary and other support. In the current quarter, the company, which also owns the company communication software Slack, wants to book 800 million to one billion dollars of the total costs.
After a disappointing stock market year: Salesforce shares are rising
In response to the job cuts, Salesforce shares rose nearly three percent at the start of trading on Wednesday. However, 2022 was the group’s worst stock market year since 2008 with a drop of almost 50 percent.
Salesforce only disappointed investors at the end of November with the outlook for the final quarter ending in January and Taylor’s departure at the end of January. Since then, other top executives have turned their backs on the 23-year-old company.
These included Slack boss Stewart Butterfield and the boss of the analysis service Tableau, Mark Nelson. Slack and Tableau are among the several billion-dollar acquisitions that have seen Salesforce grow strongly in recent years. However, the company now has to be trimmed for efficiency.
Salesforce is not the first US tech company to make extensive job cuts during the crisis. Similar messages have already come from Twitter and Facebook parent company Meta Platforms. Amazon is also currently evicting thousands of employees.
With agency material
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