Salesforce lays off 7,000+ employees in January 2023

On Wednesday, January 4th, Salesforce announced yet another round of layoff, impacting 10% of all employees - or roughly 7,000 people. This comes as the broader technology sector gears up for a cold start to 2023 with expectations of layoffs across the board and announced plans to do so already coming from Google, Amazon, and others.While the official quote from Salesforce CEO, Marc Benioff, is that they "hired too many people leading into this economic downturn", it may be more a question of hiring too many people in the wrong location. In late September, Salesforce announced plans to increase headcount in India by 33%, adding 2,500 employees to the region. This was quickly followed by a small round of layoffs at the CRM giant in October of 2022, mostly impacting Talent Acquisition and Recruiting teams across North America. You can see where this is going...

A Timeline of Salesforce Layoffs in 2022

It's been a tumultuous year for the entire technology sector but Salesforce has the added battle of outside pressure from investors, pushing the 20 year old industry leader to prioritize margins and profitability over all else. As a result, the stock is down 45% in the past 12 months.

Salesforce Layoffs hit in May 2022

Salesforce expanded headcount from 57,000 to 73,000 throughout 2021 and announced plans in January 2022 to add another 4,000 staff globally. By May 2022, they had quickly reversed course with the first round of planning layoffs.

Salesforce Increases Hiring in India through January 2023

In early 2020, Salesforce had roughly 2,500 employees throughout India, a number that had grown to 7,500 by the start of 2022. Whether this has been a long-planned regional expansion or a move brought on by comfort with remote work during the pandemic, the message was pretty clear after a round of staff reductions in May 2022 followed by an announcement of increasing India's headcount by 33%.

Salesforce planned on continuing to hire but the focus would be less on their established markets and more on emerging regions like India.

Salesforce Cuts North American Talent Acquisition

Just a month after the announcement of hiring plans for India, Salesforce made a modest round of layoffs.

While this cut impacted several hundred employees, it was the location and role of those employees that sent a bigger message. A statement that hiring efforts would be slowing down in North America, potentially for an extended period, despite picking up in other regions.

Huge Cuts at Salesforce in Early 2023

In the most significant round of cuts yet, Salesforce delivered a clear message in the first week of 2023. They are committed boosting margins and plan to undergo significant restructuring to get there.

While there aren't full details on the teams or regions that have been impacted by these layoffs, a reduction of 10% is massive when you consider Salesforce employees 70,000+ people globally. Combined with a dedicated plan to reduce their physical office footprint, this signals major changes ahead for size and shape of Salesforce's work force.

While a focus on operating margins is beneficial to the long-term stability of the company, concerns may start to set in if Salesforce slows their pace of innovation and new product development. Factoring in that 2 critical members of the Executive Team departed at the end of 2022 and acknowledging that these individuals were essential components to the next phase of Salesforce's product vision (Stewart Butterfield, Founder of Slack and Bret Taylor, Founder of Quip and former co-CEO alongside Benioff), and you may start to worry about Salesforce losing a step.

Time will tell but for now, it's clear that 2023 is off to a rocky start.