E-commerce giant Amazon and enterprise software maker Salesforce are the latest US tech companies to announce major job cuts as they slash payrolls that have grown rapidly during the pandemic lockdown.
Amazon announced on Wednesday that it would cut about 18,000 positions. It’s the largest round of layoffs in the Seattle-based company’s history, despite representing just a fraction of its 1.5 million employees worldwide.
“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” CEO Andy Jassy said in a memo to employees the company released publicly. “These changes will help us pursue our long-term opportunities with a stronger cost structure.”
He said the layoffs will primarily affect the company’s physical stores, which include Amazon Fresh and Amazon Go, and its PXT organizations, which handle human resources and other functions.
In November, Jassy told staff that layoffs were coming due to the economic landscape and the company’s rapid hiring over the past few years. Wednesday’s announcement included earlier job cuts that had not been numbered. The company had also offered voluntary buyouts and cut costs in other areas of its sprawling business.
Salesforce, meanwhile, said it was laying off about 8,000 employees, or 10% of its workforce.
The cuts announced Wednesday are by far the largest in the 23-year history of a San Francisco company founded by former Oracle executive Marc Benioff. Benioff pioneered the method of renting software services for internet-connected devices – a concept now known as “cloud computing”.
The layoffs come on the heels of a reshuffle in the upper ranks of Salesforce. Benioff’s handpicked co-CEO Bret Taylor, who was also chairman of Twitter at the time of its torturous $44 billion sale to billionaire Elon Musk, has left Salesforce. Then Slack co-founder Stewart Butterfield left. Salesforce bought Slack two years ago for nearly $28 billion.
Salesforce employees who lose their jobs will receive nearly five months’ salary, health insurance, job resources and other benefits, according to the company. Amazon said it also offers severance pay, transitional health insurance benefits and job placement assistance.
Benioff, now the sole chief executive of Salesforce, told employees in a letter he blamed himself for the layoffs after continuing to hire aggressively amid the pandemic, with millions of Americans working from home and growing demand. for business technology.
“As our revenues have accelerated during the pandemic, we have hired too many people leading to this economic downturn we are currently facing, and I take responsibility for that,” Benioff wrote.
Salesforce employed approximately 49,000 people in January 2020 just before the pandemic hit. Today, Salesforce’s workforce is still 50% larger than before the pandemic.
Meta Platforms CEO Mark Zuckerberg also admitted misinterpreting the revenue gains the Facebook and Instagram owner was reaping during the pandemic when he announced in November that his company would lay off 11,000 employees, or 13% of its workforce. workforce.
Like other big tech companies, Salesforce’s recent descent from the heady days of the pandemic weighed heavily on its stock. Prior to Wednesday’s announcement, shares had plunged more than 50% from their high of nearly $310 in November 2021. Shares gained nearly 4% on Wednesday to close at $139.59.
“This is a smart poker move on Benioff’s part to preserve margins in an uncertain environment as the company has clearly oversized its organization over the past few years with the rest of the tech sector with a slowdown in the market. ‘horizon,” said Wedbush analyst Dan Ives. wrote.
Salesforce also announced on Wednesday that it would be closing some of its offices, but did not include locations. The company’s 61-story headquarters has been a prominent feature of San Francisco’s skyline and a symbol of the importance of technology to the city since its completion in 2018.