Salesforce, one of the largest companies in the Bay Area, announced on Wednesday that another 10% of their workforce, or around 7,000 people, will be let go in the latest round of cuts, continuing the mass Silicon Valley layoff trend that began late last year.
While many tech firms had been on rocky footing in the Bay Area for several years following a post-COVID slide, still sky-high Bay Area rents, and numerous other factors, companies did not begin to really let go large number of employees until October of last year, although there had been some red flags such as companies like Tesla and Oracle moving their headquarters out of state during the pandemic. Beginning in October, the mass layoff began, with San Francisco-based Twitter getting rid of 3,700 positions only a week after being bought by Tesla CEO Elon Musk. Many companies quickly followed suit, including rideshare company Lyft removing 550 jobs, Opendoor getting rid of 550 employees, and finance tech giant Stripe laying off 1,120 employees.
By November, the situation grew even more dire, with Salesforce cutting jobs for the second month in a row and Meta cutting an astounding 11,000 jobs, most of which were in the Bay Area. Other smaller companies have also shed thousands more within the time span, as well as non-California based companies with Bay Area presences, such as Amazon, which announced that 263 people would be let go from their Sunnyvale location. Things slowed in December, with the holidays halting many layoffs, although companies like Intel did have smaller cuts of around 200 people last month.
With the new year starting, many tech experts warned that large layoffs would return for at least the early months of 2023. Only four days into the new year, the predictions proved accurate as Salesforce announced yet another round of layoffs. However, instead of cuts in the hundreds, Salesforce said that cuts would be 10% of all employees, or around 7,000 in total.
In an SEC filing and letter to employees on Wednesday, Salesforce CEO Marc Benioff blamed hiring too many people during the pandemic to keep up with increased demand, only for that demand to fall as COVID ended and employees began going to to offices either full or part time.
“As one ‘Ohana, over the last 23 years, Salesforce has built the #1 CRM that drives incredible customer success across every line of business for every industry around the world,” wrote Benioff on Wednesday. “We have never been more mission-critical to our customers. We have an unparalleled ecosystem, with thousands of partners and millions of Trailblazers building their companies on our platform.
“However, 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. I’ve been thinking a lot about how we came to this moment. 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 re-stabilization also hit executives in recent months as well, with many resigning in the past few months, including the CEO of Salesforce-owned we-chatting service Slack.
More mass layoffs in Silicon Valley
Experts noted that Salesforce would not be alone with mass cuts, with many more expected in the first quarter of the year as tech companies respond to the market going back to pre-pandemic levels and the industry responding to issues in the Bay Area ranging from high taxes to employee dissatisfaction in the area.
“We knew big ones would happen this year again, but we didn’t expect as soon as four days into 2023,” explained Julie Ochs, a San Jose-based headhunter and hiring specialist, to the Globe on Wednesday. “And 10%. That’s a lot of people. Not everyone will be in i and around San Francisco, but many will. The city is already worried about open office space and a struggling downtown. This is only going to putter that along.”
“The big takeaway with the Salesforce layoffs is that this is a company that already had big layoffs last year at a few points, and is now doing it again. That means other companies are probably planning the same thing, at least some mini-layoffs of a few hundred here and there. There’s also a fresh excuse of “Market correcting in a post-pandemic world”, and you can bet that you’ll see variants of that later this year.”
More Silicon Valley company layoffs are expected soon.
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