Salesforce to lay off 700 amid industry restructuring

Stock price remains strong

Salesforce is laying off approximately 700 employees, in a move aimed at streamlining operations and bolstering growth.

The decision, first reported by The Wall Street Journal, underscores tech giants' ongoing efforts to adapt to both the changing macroeconomy and investor expectations.

Salesforce's downsizing effort represents around 1% of the company's 70,000-strong global workforce.

Last year, Salesforce faced scrutiny from activist investors, prompting a reassessment of company spending and margins.

To meet investor demands, CEO Marc Benioff launched a variety of cost-saving measures, including layoffs and curtailing expenses such as employee travel, real estate and retreats.

Over the past 12 months the company's stock has risen nearly 80% - outperforming the Nasdaq Composite Index's 37% - buoyed by improved profit margins and a focus on operational efficiency.

Salesforce is also working in the generative AI space, with Benioff highlighting both strong customer interest and data preparation for AI technologies during the company's quarterly earnings call in November.

Despite the promising outlook for AI-driven solutions, Salesforce executives caution that tech spending remains "measured," with Benioff acknowledging channel partners' ongoing challenges.

While the latest downsizing effort might signal a switch from previous bullishness, insiders familiar with Salesforce's plans told the WSJ that the move may be more aligned with routine adjustments than a drastic departure from its core strategies.

The company is still advertising over 1,000 open positions across various departments, signalling this is more likely just normal tech industry resizing.

Salesforce's decision follows a similar, but much more sweeping, initiative last year, during which it cut its workforce by 10% and shuttered some offices.

This proactive measure proved instrumental in enhancing the company's earnings performance, with second and third-quarter revenue registering growth and prompting an upward revision of its annual profit forecast.

The decision to reduce headcount follows a wave of job cuts sweeping the US tech sector.

Last week, eBay announced its intent to cut around 1,000 roles: an estimated 9% of its total workforce.

Microsoft has also disclosed plans to eliminate 1,900 positions at Activision Blizzard and Xbox, while Amazon has also been slimming its gaming headcount.

According to Layoffs.fyi, more than 21,000 workers have been dismissed from 76 tech firms in January alone. However, this is well below the nearly 90,000 who lost their jobs in January 2023.

More than 260,000 tech job were cut in 2023, Layoffs.fyi says, the highest number of any industry. However, other reports - like this one from Challenger, Gray and Christmas - put the figure rather lower, at around 168,000. Microsoft itself contributed to this statistic with over 10,000 cuts last year.

Despite the widespread job cuts, analysts and industry experts anticipate a decrease in dismissals this year as the economic situation improves.