It said it needed to cut costs after the rapid hiring of a pandemic left “too many people” amid an economic slowdown.

Salesforce Inc plans to cut its workforce by 10 percent and close some offices as it says it needs to cut costs after rapid hiring in a pandemic left “too many people” amid an economic slowdown, leaving the stock rose 5 percent.

The cloud-based software company said on Wednesday it expects between $1.4 billion and $2.1 billion in costs from the job cuts, about $800 million to $1 billion of which will be recorded in the fourth quarter.

Companies of Meta Platforms Inc until Inc have been cutting back on staff over the past year to prepare for a deep downturn as global central banks have aggressively raised interest rates to curb stubbornly high inflation.

Companies that relied on cloud services during the coronavirus pandemic are now trying to cut costs by cutting jobs or postponing new projects, which is driving companies like Salesforce and Microsoft Corp.

“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Co-Chief Executive Officer Marc Benioff said in a statement. letter to employees.

“As our sales accelerated due to the pandemic, we overhired, leading to this economic downturn that we are now facing, and I take responsibility for that,” Benioff added.

Benioff, co-founder of Salesforce in 1999, said workers in the United States who are released will receive nearly five months’ pay, health insurance, career advancement and other benefits.

“This is a smart poker move by Benioff to preserve margins in an uncertain environment as the company has clearly overbuilt its organization in recent years, along with the rest of the tech sector, with a slowdown ahead,” said Wedbush- analyst Dan Ives. wrote in a customer note.

Salesforce had 73,541 employees at the end of January last year, a 30 percent increase from 2021.

The company’s growth has slowed over the past four quarters, with Salesforce posting the weakest revenue increase in the third quarter.

“Companies will want to show voting shareholders that they can once again deliver value through investment returns, even in times of downturn,” said Joshua White, an assistant professor of finance at Vanderbilt University. “Layoffs will be a big part of that equation.”

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