Salesforce Cuts Office Space and 10 Percent of Employees After Rapid Growth
By Mark Hallum January 4, 2023 1:41 pm
reprints
Salesforce is following in the footsteps of other firms by laying off workers and ditching office space after rapid growth during the pandemic.
Ths San Francisco-based software company announced its intention to cut overhead costs — including reducing its workforce by 10 percent — as it gears up to weather an economic slowdown, the company informed staff in a Wednesday morning email.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Salesforce co-founder and CEO Marc Benioff wrote in the email. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.”
Salesforce plans to pay $450 million to $650 million to reduce its current office footprint, but the firm declined to say which locations will be cut loose, according to a Securities and Exchange Commission (SEC) filing. In New York, the company leases about 300,000 square feet at 3 Bryant Park, which was renamed Salesforce Tower in 2016.
Ivanhoé Cambridge, the landlord at the Salesforce Tower, did not immediately respond to a request for comment.
For the layoffs, which will impact about 8,000 employees, Salesforce will pay out between $1.4 billion to $2.1 billion in the form of employee transition costs, severance payments, employee benefits and share-based compensation, according to the SEC filing.
The company expanded rapidly after a revenue spike during the pandemic and went from 54,000 employees across the globe in April 2021 to 73,500 in March 2022. But Benioff acknowledged in the email that it “hired too many people leading into this economic downturn.”
While the firm had committed to allowing employees to continue working remotely as the pandemic restriction eased, it was still moving forward with the opening of a 60-story office tower along the Chicago River, and three other towers scattered across the globe, Commercial Observer previously reported.
It will join several other major tech firms that boomed during the pandemic, including Amazon and Facebook parent company Meta, and have now started to lay off staff and cut office space. Meta alone plans to spend at least $2.9 billion this year to shrink its global office footprint.
Salesforce expects to complete all aspects of the restructuring plan by the end of 2026.
Mark Hallum can be reached at mhallum@commercialobserver.com.
