Salesforce Inc. is initiating job cuts at the start of its new fiscal year, despite simultaneously recruiting employees to promote its latest artificial intelligence products, according to a source familiar with the matter.
More than 1,000 positions will be impacted, according to the source, who requested anonymity due to the sensitive nature of the information. Affected employees will have the opportunity to apply for other roles within the company.
A representative for San Francisco-based Salesforce declined to provide a statement. The specific divisions targeted by the reductions remain unclear. As of January 2024, at the close of the previous fiscal year, Salesforce employed nearly 73,000 individuals.
This move follows a trend of workforce adjustments in the technology sector, which has become increasingly common since the widespread layoffs in early 2023. Major players like Amazon.com Inc., Microsoft Corp., and Meta Platforms Inc. have all implemented workforce reductions this year.
Salesforce shares saw a 1.6% increase Tuesday morning in New York. Evercore ISI analyst Kirk Materne noted that the cuts indicate “the company’s focus on driving productivity and should help offset some of the incremental sales hiring that the company has already outlined.”
While Salesforce, a leading provider of customer management software, is actively recruiting salespeople to specialize in its new AI agent products, the company is also prioritizing profit margin maintenance, following pressure from activist investors in 2023.
Salesforce anticipates securing thousands of Agentforce deals this quarter, highlighting its investment in AI-driven sales solutions. However, the company remains committed to balancing growth with profitability.
“Just because we have a hit new product doesn’t mean that we ignore the commitments we’ve made internally and externally as we think about scaling this business,” Chief Operating Officer Brian Millham stated during a Barclays Plc event in December. “We’re looking across the entire company to say, ‘Where can we get more efficiencies? How can we continue to get fuel for the work that we’re doing to go invest in scale going forward?'”
Salesforce is projected to release its fourth-quarter earnings report towards the end of February. The upcoming report will provide further insight into the company’s financial performance and strategic direction.
