Salesforce will cut 10 percent of its workforce in the coming weeks, highlighting how even the most prominent tech providers have not proven immune to the challenging economic climate.
The move will impact 8,000 employees, with those based in the U.S. set to receive a minimum of almost five months of pay, health insurance, and other benefits.
Marc Benioff, CEO of Salesforce, also indicated that those outside the US will secure a similar package while taking personal responsibility for the layoffs.
In a note to employees, he stated:
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.
“Our leadership will reach out directly to these employees, and provide clarity for their teams about changes within their organizations.”
These changes will come as part of a large-scale restructure, which Salesforce expects to cost between $1.4-2.1BN, per a recent regulatory filing.
A restructuring of this magnitude also implies that the move came as part of a strategy change. Indeed, some suggest the vendor will refocus on its core CRM business, given the economic outlook.
Is Salesforce Refocusing On Its Core CRM Business?
Last month, Dave Michels, Lead Analyst at TalkingPointz.com, somewhat predicted a giant restructure at Salesforce in a conversation with CX Today.
Interestingly, he proposed that – in doing so – Salesforce may deprioritize Slack and put more emphasis on its conventional CRM business.
“It was a $27.7BN acquisition that nobody really understood to begin with,” says Michels. “But, the pandemic happened, it kind of worked, and they had some leverage.
“The pandemic is ending. Now, what are they going to do?
“I think we’re going to see a continued brain drain, loss of momentum, and I think this is just too much to happen.
There’s going to be a whole readjustment period, and the stock is down. They’ve got to focus on the CRM core business, forget Slack, that’s a distraction.
Such an argument suggests that Slack may be to Salesforce what Skype was to Microsoft: a solution it just can’t make a home for. This idea gains momentum considering how Microsoft and Zoom have significantly enhanced their share of the UCaaS space.
News of Stewart Butterfield, CEO and Founder of Slack, leaving the company may further add to this narrative. Yet, others disagree, believing that Slack will play a central role moving forward.
Will Salesforce Continue With Its Strategy for Slack?
Liz Miller, VP & Principal Analyst at Constellation Research, disagrees with the assertion that Salesforce will set Slack to the side in 2023.
Instead, she believes that Slack and Genie are “the bridge to Salesforce’s future,” with MuleSoft the solution that may move out of the spotlight as an integrator to legacy solutions.
“Slack is now the operational center point,” says Miller. “The equal in the platform to the lake house data layer that Genie represents. Einstein gets to “go nuts” across both of those, and then all the other applications get right-sized.”
Indeed, Salesforce aimed to turn Slack into the UI for most of the enterprise, and Michael Fauscette, Founder, CEO, and Chief Analyst at Arion Research, does not believe it will deviate from this plan. He adds:
With Genie in the platform and Slack on top of it, I think it’s a powerful combination. Now, other pieces have come along, and we’re not there yet, but it’s a start, and nobody else has started in that direction right now.
In taking this approach, Salesforce has taken on the hyper-scalers. Yet, now it has completed the base engineering, the question becomes: what will Benioff’s next big dream be?
Perhaps this will involve a step in another direction, as the large restructure may suggest. Or maybe Salesforce will press ahead and recommit to the “Slack and Genie bridge”?
For now, according to Miller, Benioff is likely to primarily focus on “installing the team around him to keep the ship steady as he’s running around the deck dreaming big dreams.”