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Home » Salesforce Announces 10% Workforce Reduction in Restructuring Move

Salesforce Announces 10% Workforce Reduction in Restructuring Move

05 January 2023, Thursday
Salesforce, a US tech company that employs over 2000 employees in Ireland, has told its staff it will reduce its workforce by approximately 10% and also close some offices as part of its cost-cutting restructuring program. Over the past year, share prices of the cloud software firm have descended drastically, along with other tech stocks, due to an increment in interest rates and the overall gloominess in the overall economy.

In a letter to employees, Salesforce co-CEO Marc Benioff noted the "difficult" circumstances and customers cutting back on spending as the reasons for the cuts. He said the organization had "employed too many people" when development increased during the Covid-19 pandemic.

Affected personnel will be notified promptly and will be provided with a "substantial" severance package, which includes five months' salary, health insurance, other benefits and career support for those US staff being laid off.

Salesforce announced plans for a restructuring programme which will include job cuts across its global operations. According to the company's CEO, Marc Benioff, the move is part of an effort to reduce operating costs, improve margins, and grow profitability. He stated that employees in the US would be offered a comprehensive support package, with local processes being adjusted to abide by the relevant employment laws in each country. The company has also filed a document with the US Securities and Exchanges Commission (SEC) to provide details of the restructuring plan.

Salesforce announced that their plan includes a decrease in personnel, estimated to be around 10%, along with the closure of some real estate locations and offices in specific markets. Certain countries have regulations that must be adhered to when making such decisions, as well as the company's own needs, but no information was provided regarding which areas would be affected.

Salesforce anticipates charges ranging from $1.4bn to $2.1bn associated with their restructuring plan, of which $800m-$1bn will be sustained in the fourth quarter of 2023. Approximately $1bn to $1.4bn of these charges are predicted to be allocated to employee transition, severance payments, employee benefits, and stock-based compensation, with $450-650m allocated to exit charges for lessening office space.

Salesforce stated that approximately $1.2bn to $1.7bn out of the total amount of charges related to the plan will be in future cash expenditures. The personnel restructuring measures planned under the program are anticipated to be completed by the end of the company's fiscal year 2024, with due consideration of relevant local laws and consultation requirements. Full completion of the real estate re-organization is expected in fiscal year 2026.

The news from IDA Ireland last month was that job growth in the country would be slower in 2023, following 8,410 job losses at multinational companies in Ireland in the previous year.

Last year, Ireland's FDI employment surpassed 300,000, with a net gain of 24,020 jobs. This increase was driven by the creation of 32,430 new ones, while a portion was offset by job losses. Among those companies that faced job cuts in the latter part of 2020 were Meta and Stripe, attributing the decision to an ailing economy and having overhired during the Covid pandemic. Twitter, which was recently taken over by Elon Musk, also slashed half of its workforce.
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