Salesforce Inc on Wednesday announced a restructuring plan, aimed at reducing operating costs and improving operating margins, which also includes current workforce reduction by about 10%.
“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,” Salesforce’s co-CEO Marc Benioff wrote in a letter to employees.
“Within the next hour, employees who are initially affected by this decision will receive an email letting them know. Our leadership will reach out directly to these employees, and provide clarity for their teams about changes within their organizations,” Benioff added.
Salesforce expects to “incur approximately $1.4 billion to $2.1 billion in charges in connection with the Plan, of which approximately $800 million to $1.0 billion is expected to be incurred in the fourth quarter of fiscal 2023. These charges consist primarily of $1.0 billion to $1.4 billion in charges related to employee transition, severance payments, employee benefits, and share-based compensation; and $450 million to $650 million in exit charges associated with the office space reductions,” the company said in a SEC filing.
“The actions associated with the employee restructuring under the Plan are expected to be substantially complete by the end of the Company’s fiscal 2024,” Salesforce said.
The company also intends to exit real estate and reduce office space in certain markets.
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