Salesforce Hiring Resumes After Huge Layoffs Round Left Thousands Without Jobs
Key takeaways
- Salesforce is hiring back 3,300 new positions after axing 10% of its workforce, or 8,000 roles, earlier this year
- The new roles will be hiring into sales, engineering and cloud data as the company looks to focus on AI offering
- Salesforce shares closed 0.5% down on Thursday
With its tail between its legs, Salesforce is back to hiring new talent for the company after conducting a mass layoff round where 8,000 people lost their jobs. The CEO predicts many of these will be ‘boomerang hires’, which begs the question: was such a drastic job cuts round needed in the first place?
With Salesforce looking to pivot into using AI to drive growth for the company, it clearly needs the manpower to help secure its position in the new AI market. But how did investors react to the announcement after being so pleased with the layoffs earlier this year? Let’s get into the details.
What’s the latest with Salesforce?
Salesforce has announced it’s hiring 3,300 new positions after slashing over 8,000 positions earlier this year in a mass layoffs round. The new hires will replenish 40% of the headcount Salesforce cut in the first place, with the company predicting many of the hires will be ‘boomerangs’, also known as ex-employees returning to the fold.
At the company’s annual conference in San Francisco, CEO Marc Benioff said, “Our job is to grow the company and to continue to achieve great margins,” and “We know we have to hire thousands of people.” He added that the ‘boomerang’ employees will be a new metric of success for the company, which is a convenient way to spin things.
The new roles will be split between sales, engineering and Salesforce’s data cloud product. The company hopes artificial intelligence will fuel new business and investment, having launched its new AI tool, Einstein Copilot, last month. The new feature will integrate across its products, such as Slack and Tableau.
Salesforce has been on a mission to reduce expenses and boost its bottom line, with mass layoffs as part of that cost-cutting drive. More strategic cuts are still rumored to take place should the need arise.
How did Wall Street take the news?
Having approved of this year’s cost-saving plans, investors have driven up Salesforce’s stock by over 62% since the start of the year compared to the S&P 500’s 17% gain in the same period. However, this time around, Salesforce’s share price closed 0.5% lower after the news.
Salesforce’s latest earnings beat reflected the optimism around the company’s future. Earnings arrived at $2.12 a share compared to the $1.90 expected by analysts, while revenue topped $8.6 billion, beating forecasts of $8.54 billion. Looks like those cost-cutting measures have paid off.
The bottom line
There are questions over whether Salesforce needed to be so punitive with its mass layoffs round earlier this year, considering its plans to offer old jobs back to former staff. But it did the trick at the time with the share price, which has continued to grow throughout 2023.
If Salesforce can pull off its quest to carve out a space in the AI market, the growing pains will be worth it.
