San Francisco-based software firm Salesforce has announced it will lay off around 10 per cent of its workforce in the coming weeks.
The job losses mean the company’s global workforce of around 79,000 would decrease by about 7,900 staff.
In an email to staff, Co-CEO and Co-Founder Mark Benioff explained:
“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.”
In the past two years, Salesforce has seen an increase in hiring, mainly due to the rise in digital services brought on by the COVID-19 pandemic. In 2021 it added around 17,000 staff and by the autumn of 2022 had 6,500 more.
Benioff, who co-founded Salesforce in 1999, spoke about what would happen for US employees released from their contract; he stated: “For those who will be leaving Salesforce, our priority is to fully support them, including by offering a generous package. In the U.S., affected employees will receive a minimum of nearly five months of pay, health insurance, career resources, and other benefits to help with their transition.”
Referring to the firm in general, Benioff outlined his reasons for the cuts: “We have never been more mission-critical to our customers. We have an unparalleled ecosystem, with thousands of partners and millions of Trailblazers building their companies on our platform.
“However, the environment remains challenging, and our customers are taking a more measured approach to purchasing decisions. With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 per cent, mostly over the coming weeks.”
Job Cuts Across the Tech industry
The announcements come in a week when two other tech giants, Amazon, Vimeo, Meta and Microsoft have revealed plans to make substantial cuts.
Even though Amazon was expected to cut around 10,000 workers, it instead has stated that it will release more. In an update posted today shared to its employees referring to ‘role eliminations’, Andy Jassy, CEO at Amazon, stated: “Between the reductions we made in November and the ones we’re sharing today, we plan to eliminate just over 18,000 roles.”
In a second round of layoffs in six months, Vimeo announced more this week. CEO Anjali Sud stated the video marketing platform would be cutting around 11 per cent of its estimated 1,400 staff.
Meta cut 11,000 jobs in November, equating to about 13 per cent of the workforce, mostly from Facebook, Instagram and WhatsApp with the metaverse division taking less of a hit.
Microsoft also laid off 1,000 jobs back in October due to ‘structural changes’, according to Office Today.
Share Price Uncertainty and Investor Pressure
Salesforce acquired Slack in 2021 and changed its internal chat to the collaboration firm’s platform, transforming how it communicates internally. Founded 24 years ago, Salesforce has faced criticism from Wall Street investors for its growth plans instead of focusing on profits. According to the Financial Times, Salesforce’s shares fell 55 per cent from a late 2021 peak, losing about $170bn from its stock market value. While Salesforce posted four quarters of slowing growth, during 2022, they lost roughly half their share value. However, share prices were up 3 per cent last Wednesday.
Following the restructuring and job cuts plan, Salesforce will be hit with $1.4bn-$2.1bn in charges, with $1bn-$1.4bn predicted to go on employee transitions, severance, benefits and shares. The employee restructure forecast will be done by the end of the fiscal year 2024.
Slack founder and CEO Stewart Butterfield is to leave the Salesforce-owned collaboration firm this month and will be replaced by Lidiane Jones, an Executive Vice President at Salesforce.
