Salesforce Managers Left in the Dark on Job Cuts — Report

… “a similar level of support.”

“The employees being affected aren’t just colleagues. They’re friends. They’re family,” wrote Benioff, whose Co-CEO Bret Taylor announced his departure last month. “Please reach out to them. Offer the compassion and love they and their families deserve and need now more than ever. And most of all, please lean on your leadership, including me, as we work through this difficult time together.”

Customer Spending

Benioff wrote in his memo that customers “are taking a more measured approach to their purchasing decisions.” That sentiment reflects trends analysts have been observing, particularly around public cloud spending.

Mila D’Antonio, principal analyst of customer engagement at Omdia, said Omdia’s “IT Enterprise Insights: ICT Drivers and Technology Priorities” study demonstrates that businesses are investing less in contact center and customer engagement technology in 2023. (Informa Tech is the parent company of both Channel Futures and Omdia.)

Omdia’s Mila D’Antonio

“Additionally, the research reveals the top two priorities for next year include increasing revenue and improving operating efficiencies,” D’Antonio wrote. “This comes amidst a backdrop of pandemic-prompted updates slowing down and macroeconomic forces (such as high inflation and interest rates, supply chain burdens, and the war in Ukraine) weigh on enterprises. Coupled with recent earnings shortfalls, these trends foretell a move away from digital CX experimentation, and more toward cautious technology spending in 2023. As a result of this cautious spending, vendors will find themselves competing on pricing and marketing their proven results, answering to discerning customers and prospects who will seek proof that dollars spent on their investments will yield adequate returns.

Margin-Focused Layoffs

Omdia’s Mark Beccue is a principal analyst with a focus on artificial intelligence. He noted that financial analysts have stated that Salesforce needs to earn better margins.

Omdia’s Mark Beccue

But Beccue pointed out that Salesforce has performed extremely well financially. Its five-year CAGR of 14.1% is better than Alphabet (Google) (11%), Adobe (10.8%) and the IT sector average (9.5%).

Moreover, the company has also earned a five-year gross profit margin of 72.7%. That’s better than Oracle (76.1%) and the IT sector average (52.8%).

“Salesforce ranks significantly above sector in gross profit margin,” Beccue told Channel Futures. ” … I’m not a financial analyst, but the push for better margins from a top-performing margin player is sort of ridiculous. While there might be some market softness coming, I think Salesforce is well positioned to continue their success because they offer a route of automation. The cutbacks, according to Benioff, are to address margins.”

Other Layoffs

Layoffs have come fast and heavy in the technology sector in the last three months. The unified communications space has seen deep cuts, with Nextiva laying off 14% of its workforce and RingCentral shedding 10%. On the cloud front, Oracle laid off about 200 people in its cloud division, and Microsoft Azure and AWS reportedly remain in hiring freezes. 

For news about eliminated jobs at Salesforce competitors, check out the Channel Futures layoff tracker.