https://www.nbcbayarea.com/news/local/salesforce-layoffs-artificial-intelligence/3941975/

Mmm...I bet AI is not the main reason but over hiring post COVID. Any insiders, what's your take?

u/Aromatic-Bad146 started a great conversation over here on the weekend: https://www.reddit.com/r/salesforce/comments/1na0yvq/salesforce_ceo_marc_benioff_defends_4000_job_cuts/

It got me thinking about how I feel the ecosystem stands. But first, I wanted to get some data.

The Real Data

Here are the raw numbers on their last 15 years of employee count:

[Year, Count, Change YoY]

2010: 4,900 -

2011: 7,700 +57.14%

2012: 9,800 +27.27%

2013: 13,300 +35.71%

2014: 16,000 +20.30%

2015: 19,000 +18.75%

2016: 25,000 +31.58%

2017: 29,000 +16.00%

2018: 35,000 +20.69%

2019: 49,000 +40.00%

2020: 56,000 +14.29%

2021: 73,500 +31.25%

2022: 79,000 +7.48%

2023: 72,000 −8.86%

2024: 68,000 −5.56%

2025: 63,000 −7.35%

Salesforce revenue by year chart:

[Year, Annual Revenue (USD Billions), Change YoY]

2010: $1.66

2011: $2.27 +36.75%

2012: $3.05 +34.36%

2013: $4.07 +33.44%

2014: $5.37 +31.94%

2015: $6.67 +24.21%

2016: $8.39 +25.79%

2017: $10.52 +25.39%

2018: $13.28 +26.24%

2019: $17.10 +28.76%

2020: $21.25 +24.27%

2021: $26.49 +24.66%

2022: $31.35 +18.35%

2023: $34.86 +11.20%

2024: $37.90 +8.72%

A Look At Growth

The Revenue growth is positive but slowing as you see. Thus the Employee count is also dropping to maintain profitability. Economic impacts are indeed showing their results. This phenomenon is not unique to Salesforce. I have been seeing a lot of discussion about companies, particularly in SaaS, squeezing their existing customers for greater returns.

But consider challenges that Salesforce is facing as a result of the scale jumps that it has gone through every few years. They didn't even spend three full years at their "1 billion" size before doubling. Then doubled again in three years. At the scale of BILLIONS there are so many clients to service. But at 38 billion? That is another definition of huge volume of clients.

Adding to that, they are down to under their 2021 employee count. Yet they are 50% bigger in revenue than they were in 2021. Maybe that is the right scale? I don't personally know. We don't have an eye on all of their internal operation. But that employee count brings them to $600,000/employee yearly revenue contribution. In 2021 it was $360,000/employee. That was a much more attainable goal. Again, we are talking about massive scales in volume here.

On top of that, I can deduce that their closed won/lost leads ratio is dropping with stronger competition entering the market. So today, every customer they alienate has more options to explore. Churn is a huge issue they need to manage, like all SaaS unicorns. I personally have not been seeing many leaving Salesforce, but the number is not 0.

The Layoff Reality

At the moment the Ohana spirit has degraded, which drives negative sentiment. Realistically, one upset admin is enough to create a churn situation. Yet at the moment, Salesforce is eliminating support roles in yet another round of layoffs. I assume it is to right-size and to increase profitability. In my limited experience, the client experience is worse with Agentforce at the moment. So unsurprisingly, it is drawing large negative press. We are yet to see how that decision impacts the market long term.

What we are also beginning to see a bit more layoffs at mid size and large implementation providers. And I am personally speaking with a lot of people who are interested in starting their own independent practice. I am biased, but believe that smaller teams will have more stability in the current economic reality.

Another reality is that Salesforce is a large business that has to grow to maintain shareholder momentum. A lot of us have benefited from it in our careers. I am grateful for the organization. Some of us became emotionally attracted to our persona of being a Salesforce-first person. So the alienation is a source of lost identity for a lot of people.

Dreamforce next month is going to be a big litmus test. Let's see if Salesforce presents itself as a human first organization. If they work to bring back some good will from their most loyal fans. Or if they firmly dig in as an Agent first organization. Whatever they do, it will be the audience that ultimately decides what their message is.

With that backdrop, and other business challenges, I can understand cuts even without AI. AI is ultimately just another feature of technology that is going to have a marketplace impact. But it appears to be poised to make a dramatic impact. So a strategist at a company like Salesforce also needs to make decisions that are ahead of it's current immediate reality.

Agents Of The Future

I could understand making the assumption that agentic tech is improving so rapidly that you should double down and scale down to a reality that is coming. I believe Agentforce WILL be better than it is today. And given it's wide access to sources of data it likely is to become the strongest Salesforce AI tool. But at the moment, Salesforce native AI is technologically behind.

Agentforce does not yet have a value proposition that it needs to go mainstream in SMB. They have been starting to finally get big players to share user stories, and they just published a big set of stories by companies using Agentforce for real. Including Reddit! But right now I have no clients asking to use it. I am not seeing a ton of buzz about it in SMB with decision makers. But let's see what their engineering team can do. And what emerging AI market leaders they can acquire.

To finish, I still believe in the platform as a CRM market leader, but always work to recognize where other technology is a better solution in a stack. We must all double down on being client first and use Salesforce as effectively as possible but only where necessary.

I hope people see this for the balanced take that I tried to make it. I am not trying to attack anyone or say I know the solution to make everyone happy. In my work I always try to be clear and matter-of-fact. This is simply the best I can understand the nuances of this complex ecosystem, with the information at my disposal.

What did I miss? What do you think about the direction of the Salesforce ecosystem?

(Flagged as career question, but it would be a very broad one)

Is anyone else beginning to feel rather uneasy about the future of the core platform?

I have no issue with AgentForce at all, and wish Salesforce all the luck with it (I can’t use it for regulatory reasons RN) But the messaging around hiring 1,000 new AI people and cutting ‘legacy’ people at the same time isn’t great.

https://www.sfchronicle.com/bayarea/article/salesforce-layoffs-20151757.php

A less pessimistic view is that maybe Salesforce is just spreading roles globally, and it makes sense to have fewer Bay Area salaries