After increasing its workforce by over 50 per cent during the pandemic, cloud software giant Salesforce is now reversing direction. The company will cut its headcount by 10 per cent and close some offices, according to a letter that co-CEO Marc Benioff issued to employees earlier this week.
"The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions. With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks," he wrote.
"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."
Salesforce had slightly under 50,000 employees at the beginning of 2020, and ended 2022 with just under 80,000 after a prolonged hiring spree throughout the pandemic. Like many other big tech firms, the company saw a huge spike in the demand for its products and services over 2020 and 2021, culminating in revenue of $26.5 billion and a market capitalisation of over $300 billion during the financial year ending March 2022. It also made its biggest ever acquisition during that period - collaboration platform Slack in December 2020 for the whopping sum of $27.7 billion.
However, Salesforce has recorded slowing growth over the last few quarters, and its market capitalisation has dropped to pre-pandemic levels of $134 billion. Without cutting its headcount, the company might not be able to meet its ambitious financial targets.
Benioff said in his letter to staff that the job cuts will take place "over the coming weeks", but did not publicly disclose which divisions or geographical locations will be most affected. However, reports indicate that some cuts have already begun at MuleSoft, where recruiters and product managers have been hit. And a December message from Benioff - where he complains that employees hired during the pandemic are less productive - suggests that the cuts may start with the most recent hires, reversing the two-year spree which brought the company to its current position.