San Francisco‘s largest private employer will be a less-large private employer, as Salesforce dropped a bomb Wednesday morning announcing that they’re laying off nearly 8,000 employees.
Back in November, before the holidays, we picked up on a report that SF’s largest private employer, the cloud computing and software firm Salesforce, was laying off “as many as 2,500 workers.” But there was some pushback to that report, with internal Salesforce sources telling the Chronicle at the time that the layoff numbers were only in the hundreds, and that “no additional layoffs are currently expected.”
But the landscape has either changed since then or that was all just face-saving. Wednesday morning, the New York Times reported that Salesforce is laying off nearly 8,000 people, or about 10% of its overall staff, which is obviously a far higher reduction than even the scariest figure reported in November.
Salesforce is laying off about 10% of its workforce, more than 7,350 employees. https://t.co/ZbKDNdTTQp— ABC News (@ABC) January 4, 2023
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Benioff writes. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.”
“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,” he adds. “Within the next hour, employees who are initially affected by this decision will receive an email letting them know. Our leadership will reach out directly to these employees, and provide clarity for their teams about changes within their organizations.”
As part of a restructuring plan, Salesforce is laying off 10% of the company (~8,000 employees) and cutting down real estate in select locations.— Tanay Jaipuria (@tanayj) January 4, 2023
The full letter from Benioff ⬇️ pic.twitter.com/1ffFFXqDPP
It sounds like laid-off Salesforce employees are getting a pretty sweet severance package, for what it’s worth. “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," Benioff's email says. "Those outside the U.S. will receive a similar level of support, and our local processes will align with employment laws in each country.”
Salesforce lays off ~8,000 or 10% in the tech's second-biggest recent downsizing, behind only Meta: https://t.co/crJ3lmHVOj Salesforce also plans to close more offices— Roland Li (@rolandlisf) January 4, 2023
We don’t know how many San Francisco Salesforce employees are getting the ax here. But the Chronicle points to a regulatory filing that says “The plan includes a reduction of the company’s current workforce by approximately 10 percent and select real estate exits and office space reductions within certain markets.” So surely the company is dumping office space too, which is not going to help the downtown SF office space vacancy situation — although the company has spent the last couple of years offloading/subletting some of its SF office space already.
SCOOP: Slack CEO says ‘relatively generous’ severance packages give him ‘some comfort’ after Salesforce announces 10% cut in a 3 a.m. message— Kylie Robison (@kyliebytes) January 4, 2023
You can view more details of Slack CEO Stewart Butterfield's message to staff here:https://t.co/s6nsMJiX7K pic.twitter.com/FrvSBTlL1t
The layoffs will also cut across the messaging platform Slack, which Salesforce acquired in late 2020. Slack CEO Stewart Butterfield announced he was leaving last month, which may have been a more ominous move than we realized at the time.
But the Slack acquisition itself may have also been a sign that Salesforce was growing too fast and spending too extravagantly. That happened back when tech companies were making bank while the larger national economy was ravaged by the pandemic. As the New York Times points out, “Salesforce employed just under 80,000 people at the end of October, up from about 48,000 three years earlier.”
So the company nearly doubled in size during the pandemic, and now realizes it probably shouldn’t have. Whether the recent surge in tech layoffs ends up having broader economic ramifications, or stays contained to just tech companies shedding bloat, still remains an open question.
Image: Riley via Unsplash