Salesforce will make 10% of its workforce redundant in a restructuring project designed to cut costs at the cloud CRM giant. It is the second round of job cuts at the company in three months, and comes amid big changes in its C-suite.
The company revealed its plans to the US regulator the Securities and Exchange Commission (SEC) today, explaining in a filing that around 7,000 employees could leave the business. It currently employs 73,000 people.
Salesforce layoffs come in ‘challenging environment’
Salesforce is also looking to reduce its real estate footprint by closing some offices, the SEC filing says. The move is expected to cost the company between $1.4bn and $2.1bn in payments to departing staff, as well as $450m-$650m in exit charges associated with office space reductions. Redundancies are expected to be complete by 2024, with the office reduction set to continue until 2026.
Founder and CEO Marc Benioff laid out the reasons for the changes in a letter to staff also published today. “As our revenue accelerated through the pandemic we hired too many people, leading into this economic downturn we’re now facing,” Benioff wrote. “The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions.”
Salesforce’s workforce has doubled since 2019, and the company was one of the success stories of the Covid-19 pandemic as businesses switched to using its cloud-based systems in their droves.
But the difficult economic conditions have started to bite, and indications of downsizing were evident in November as rumours flew that Salesforce was cutting up to 2,500 roles. The company confirmed layoffs at the time, but said they would be in the hundreds. “Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition,” a Salesforce statement said.
Today’s news comes amid big job cuts across the tech sector, with the likes of Meta and Amazon making the biggest layoffs.
Boardroom shake-up at Salesforce
Salesforce’s strategy of spending big on the acquisitions of companies such as Slack and Tableau has come under scrutiny in recent months. One activist investor called Starboard Value took an undisclosed stake in the company last year, stating its profit margin should be significantly higher than current levels.
A shake-up in its senior management is also like to have had a destabilising effect on the business. Co-CEO Bret Taylor left in December to “return to his entrepreneurial roots,” leaving Benioff to run the company single-handedly. He is thought to be seeking a replacement.
Meanwhile, Slack CEO Stewart Butterfield, announced in December that he would be leaving the company this month, while Tableau’s chief executive Mark Nelson left in December.