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Salesforce details "generous" severance package as 10% of ...

Salesforce details generous severance package as 10 of
Salesforce, which employs more than 2,000 people in Ireland, has informed staff it will layoff around 10% of its workforce and close some offices

US tech company Salesforce, which employs more than 2,000 people in Ireland, has informed staff it will layoff around 10% of its workforce and close some offices as part of a cost-cutting restructuring plan.

Shares in the cloud software firm have nearly halved in value over the past year as part of a broader sell-off in tech stocks caused by rising interest rates and pessimism in the wider economy.

In a letter to staff, Salesforce co-CEO Marc Benioff cited the "challenging" environment and client belt-tightening for the cuts, and said the firm had "hired too many people" when growth accelerated during Covid-19.

Affected employees will be informed imminently and will be offered a "generous" severance package, including five months' pay, health insurance, other benefits and career resources for US staff being laid off.

"Those outside the US will receive a similar level of support, and our local processes will align with employment laws in each country," Benioff added.

In a filing with the US Securities and Exchanges Commission (SEC), Salesforce said it intends to reduce operating costs, improve margins and grow profitability with the restructuring plan.

"The plan includes a reduction of the company’s current workforce by approximately 10% and select real estate exits and office space reductions within certain markets," Salesforce said.

Salesforce did not inform staff of where the jobs would be cut, but said in the filing that decisions regarding layoffs would be subject to local laws, consultation requirements in certain countries, and the company's business needs.

Salesforce chairman and co-CEO Marc Benioff speaks during the TechCrunch Disrupt SF 2019 conference in San Francisco. (Pic: Justin Sullivan/Getty Images)

Salesforce expects that it will incur charges of $1.4bn to $2.1bn in connection with the restructuring plan, of which $800m to $1bn will be incurred in the fourth quarter of its 2023 financial year.

Some $1bn to $1.4bn of the charges will relate to "employee transition, severance payments, employee benefits, and share-based compensation," with $450-650m being spent on exit charges for office space reductions.

"Of the aggregate amount of charges that the company estimates it will incur in connection with the plan, the company expects that approximately $1.2bn to $1.7bn will be in future cash expenditures," Salesforce added.

"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, subject to local law and consultation requirements.

"The actions associated with the real estate restructuring under the Plan are expected to be fully complete in fiscal 2026."

IDA Ireland, the stage agency for attracting foreign direct investment, said last month that job growth would be slower in 2023 after 8,410 jobs were cut at multinational companies based in Ireland last year.

FDI employment in Ireland exceeded 300,000 last year as a net of 24,020 jobs were added, with 32,430 new jobs cancelling out those jobs lost.

The likes of Meta and Stripe cut hundreds of Irish jobs between them at the tail-end of 2022, citing the weakening economic environment and over-hiring during Covid. Twitter also cut half its workforce following its takeover by Elon Musk.

(Pic: Stephen Lam/Getty Images)

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