Salesforce, a $30 billion-a-year software firm with a hefty Atlanta presence, has announced plans to cut about 10% of its staff and close some of its offices in an effort to slash costs.
The company, which makes software that connects business information to the computing “cloud,” is taking the action because demand for its products and services has softened, according to a letter to employees by Marc Benioff, chairman and chief executive.
“Our customers are taking a more measured approach to their purchasing decisions,” he said.
Salesforce has nearly tripled its staff in the past five years, hiring energetically at the start of the pandemic as many businesses sought ways to link employees in various locations, 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.”
The cuts have apparently been in the works. Business Insider recently reported that managers had been asked in previous weeks to provide the names of their bottom-performing 10% of their employees.
Laid-off workers will receive a minimum of nearly five months’ pay, health insurance and help finding another position, according to Benioff.
The company, which filed its plans with federal regulators, is the largest private employer in its hometown of San Francisco and has more than 73,000 employees worldwide.
In metro Atlanta, Salesforce has about 1,300 employees in a tower that bears the company’s name. However, a spokeswoman for Salesforce declined to provide any information about the impact of the cuts here.
The company is the latest tech firm to announce layoffs. Among them are Meta, which owns Facebook and Instagram; Amazon, which cut several hundred jobs in Kennesaw; Carvana; and Twitter, which filed notice with the Georgia Department of Labor of plans to layoff 62 people here.
The cuts follow a year of interest rate increases by the Federal Reserve as the central bank tries to tame inflation by slowing the U.S. economy. Although the Fed’s leaders have said they want a “soft landing,” their campaign has fueled predictions of a recession this year.
Those higher rates have nearly frozen the housing market and the overall pace of job growth has dramatically slowed, yet there are indications that the layoffs at Salesforce and other companies are less an economy-wide retreat than a shifting among sectors — at least so far.
A government report released Wednesday showed layoffs low and the rate of workers quitting jobs higher than pre-pandemic. Both contradict the recession narrative, said Nick Bunker, head of economic research for the Hiring Lab of job-site Indeed.
“Demand for workers remains robust,” he said. “A labor market this strong means an imminent recession is highly improbable.”
In Georgia, the problem will likely be a shortage of workers, not layoffs, according to Tiffany Burns, senior partner in Atlanta for McKinsey & Co.
The state has done well at encouraging business growth, but needs to do much more to nurture and expand its workforce, she said. The state has 133,000 more people employed and 43,000 fewer unemployed than before the pandemic, while job openings abound, according to a McKinsey report.
A government report on the national jobs picture in December is to be released Friday.
