Unfortunately, 2024 has kicked off with a similar theme to last year: sweeping layoffs across much of the technology industry.
TechCrunch has reported over 23,000 layoffs in January alone from companies including Google, Microsoft, eBay, SAP, and now Salesforce.
Salesforce Lays Off 1% of Workforce
The Wall Street Journal reported on Friday, January 26 that Salesforce will be laying off 700 workers – that’s roughly 1% of their 70,000 global workforce. This is in addition to last January’s announcement that the company would be laying off 10% of employees (approximately 7,000).
While last year’s layoffs were in response to “overhiring” during the pandemic (as confirmed by CEO & Co-Founder, Marc Benioff), there is as of yet no confirmation as to who will be laid off in this latest round.
The current state of the tech world seems to be in juxtaposition with these layoffs, as some stock market tech darlings are helping the S&P 500 to hit record highs; Meta, Alphabet, and Microsoft stock prices have all climbed to new heights, with Salesforce not far off.
This does indeed beg the question: why are these layoffs happening? An interesting article by TechCrunch (Yes, the tech layoffs surge you are feeling is real) looks at data from layoffs.fyi and tries to form a conclusion. Potential reasons include wider economic factors, the removal of resources that may be replaced with AI, and cutting any bloat following the hiring boom of the pandemic.
All of these factors seem plausible; while stock market prices are at an all-time high, we are yet to see key quarterly earnings data from some of these tech leaders. This will give us some insight into the economic recovery, as well as the impact of early AI-enabled products such as Microsoft’s Copilot (Microsoft’s FY ‘24 Q2 earnings come out tomorrow).
However, since Salesforce’s own Copilot products won’t be released until the end of February, it’s doubtful that these will have a significant impact on their financial year-end, which closes on Wednesday, January 31.
What Does This Mean for the Salesforce Ecosystem?
The fact that Salesforce is so tightly tied with the rest of its ecosystem doesn’t need an explanation. We’ve seen this play out over the past couple of years as Salesforce’s revenue growth has slowed and layoffs have occurred, which has in turn created an unstable job market. Unfortunately, this is probably the first time the Salesforce job market has ever been majorly affected.
One of the more plausible reasons for this latest round of layoffs is Salesforce’s focus on “performance culture”, which was fleshed out in a recent Bloomberg article: Salesforce Signals the Golden Age of Cushy Tech Jobs Is Over. As with most other hardcore sales companies, performance of salespeople is constantly monitored. Bloomberg has reported that Salesforce performance improvement plans will be put in place a few months after not hitting the right numbers, as opposed to quarters.
With all this in mind, I highly doubt that this fresh round of layoffs should cause any more concerns to Salesforce professionals. Although it’s important to bear in mind that, while layoffs have been fairly abundant over the past year within the ecosystem, they seem to be getting less frequent.
With global inflation slowing and interest rate cuts on the horizon, economic recovery does seem to be around the corner, with AI pegged to fuel this next stage of growth. We will have to see for ourselves how this plays out over the next few months, especially as quarterly earnings are delivered, as well as more and more products being rolled out.