Salesforce To Axe more Than 10,000 Staff

Marc Benioff, co-CEO and co-founder of Salesforce, has broken more bad news to all employees at the American CRM giant.

On Wednesday Benioff wrote an open letter to staffers confirming “we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.”

Benioff blamed hiring too many people during the pandemic upturn, but it comes after Salesforce already axed close to 1,000 staff in November 2022.

Office reductions

As of December, Salesforce employed more than 79,000 workers – meaning the 10 percent headcount reduction announced on Wednesday will result in the departure of more than 7,000 employees.

The firm also confirmed that it is reducing some office space as part of a restructuring plan, which is more bad news for San Francisco, as Salesforce is the largest private employer in the city.

Salesforce had cut its San Francisco office space multiple times during the Covid-19 pandemic. Now it is reducing its office space further still.

Last July the mayor of San Francisco denied there has been an ‘exodus’ from her city, but admitted a large working change was impacting local businesses in the city.

San Francisco Mayor London Breed said at the time her city would have to adjust to the new reality that many workers were not coming back to the office.

The San Francisco Bay area is home to many big name tech firms, and the city itself took a $400 million hit to its tax revenues in 2021, as businesses moved away and workers shifted to remote working.

San Francisco and indeed the US state of California, is having to contend with big name tech firms relocating to other US states.

Job losses

Marc Benioff in his letter to staff explained the reasoning for the latest round of job cuts, saying that customers have been more “measured” in their purchasing decisions given the challenging macroeconomic environment.

“With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks,” he wrote. “I’ve been thinking a lot about how we came to this moment. 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.”

“Within the next hour, employees who are initially affected by this decision will receive an email letting them know,” he wrote. “Our leadership will reach out directly to these employees, and provide clarity for their teams about changes within their organisations.”

According to CNBC, Salesforce will record charges of $1 billion to $1.4 billion related to the headcount reductions, and $450m to $650m related to the office space reductions.

The layoffs mark the latest round of departures at the firm, as Salesforce let go of fewer than 1,000 employees in November.

Later that month, Bret Taylor announced his plan to step down as co-CEO on 31 January 2023, and when that happens it means that Marc Benioff will again in sole charge of the firm he co-founded in 1999.

CNBC noted that Salesforce hired aggressively during the pandemic, as a December filing revealed that headcount had risen 32 percent since October 2021 “to meet the higher demand for services from our customers.”

But with slowing customer purchasing decisions amid a weakening global economic outlook, Salesforce joins other tech giants in making significant reductions to its workforce.