Salesforce plans to slash hundreds of jobs: Report

US-based customer relationship management (CRM) solutions provider, Salesforce, is reportedly planning for a major round of layoffs in a bid to cut costs amid a new activist investor challenge and harsh economic conditions. 

A report by news site Protocol stated that the layoffs could affect as many as 2,500 workers across the company. Salesforce however has not officially mentioned any numbers.

It was unclear when the layoffs would begin, as discussions on the plan remain ongoing. However, they are likely to happen before the Thanksgiving holiday, the publication said, citing an industry source and a former employee. 

The report said that investors are increasingly demanding a greater return from Salesforce, which has spent billions to acquire companies like Slack and Tableau. In October this year, activist investor Starboard Value has taken an undetermined stake in Salesforce and pressed the company to improve margins.  

Salesforce said in a statement to CNBC, “Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition.” 

In May this year, the software major laid off roughly 90 contract workers and implemented a hiring freeze through January 2023. Prior to that in August 2020, when Salesforce underwent layoffs, it provided 60 days' notice and severance, including placement services and a few months of benefits to affected employees.

Salesforce had more than 73,000 employees prior to this action, so the new rounds of layoff would represent a fraction of the overall workforce. 

Tech companies in the US and other markets including India have paused hiring as they are battle with consumer spending, higher interest rates and global economic uncertainty.  

According to Crunchbase News tally, as of late October, more than 52,000 workers in the US tech sector have been laid off in mass job cuts so far in 2022. Big tech companies like Twitter, Netflix, Microsoft, Snap, Meta, Amazon and others have either downsized their workforce or have frozen hiring. 

Some said that they saw unprecedented growth during the pandemic due to the boom in online spending and now many of them over-hired. For example, Bloomberg noted that Salesforce has almost tripled the number of employees since 2017. 

Not just in the US, in India too, the country’s fourth and fifth largest IT services firms, Wipro and Tech Mahindra reported a sequential decline in the number of sales and support staff and software engineers. Other companies such as L&T Technology Services, Hyderabad-based Cyient and also Zensar, reported a sequential reduction in its workforce in the quarter that ended September 2022.