Amazon, Salesforce to lay off 25,000 and reduce office space
Big tech’s downturn has continued into the new year with giant Amazon forced to reveal it is ‘eliminating’ 18,000 roles and Salesforce also slashing 7000 jobs.
Big tech’s downturn has continued into the new year, with a round of mass lay-offs set to affect staff as giants Amazon ‘eliminates’ 18,000 and Salesforce slashes 7000.
Amazon had to bring forward its planned announcement about the size of the cuts on Thursday via a blog post after an employee leaked information before those being laid off could be contacted. The company had planned to contact staff on January 18 after talking with employee unions.
Amazon chief executive Andy Jassy announced the staff “eliminations” in a post on Wednesday in the US, saying that he noted in November when the company initially announced around 10,000 staff would be laid off that further reviews were not yet complete.
“Today, I wanted to share the outcome of these further reviews, which is the difficult decision to eliminate additional roles. Between the reductions we made in November and the ones we’re sharing today, we plan to eliminate just over 18,000 roles,” he wrote.
The first lot of employees had been contacted at the time via email.
Amazon Australia has been contacted for comment about how many staff are impacted here.
“We typically wait to communicate about these outcomes until we can speak with the people who are directly impacted. However, because one of our teammates leaked this information externally, we decided it was better to share this news earlier so you can hear the details directly from me,” Mr Jassy wrote.
Also on Thursday, Salesforce announced a fresh round of lay-offs affecting around 7000 staff, about 10 per cent of its workforce, whom would be laid off in coming weeks as the company also cuts back on office space in a bid to become profitable. The decision is understood to affect local staff.
The fresh round of cuts arrive as Salesforce is building Sydney’s tallest commercial tower, a 55-storey skyscraper in Circular Quay.
Salesforce chief executive Marc Benioff admitted fault in a letter to staff on Wednesday.
“I’ve been thinking a lot about how we came to this moment. 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,” it read.
Mr Benioff said Salesforce needed to take “a more measured approach to their purchasing decisions”.
Salesforce was contacted for comment but directed questions to the company’s filings to the United States Securities and Exchange Commission in which Salesforce outlined a “restructure plan” that would cost as much as $US2.1bn ($AU3.07bn).
“These charges consist primarily of $1.0 billion to $1.4 billion in charges related to employee transition, severance payments, employee benefits, and share-based compensation; and $450 million to $650 million in exit charges associated with the office space reductions. Of the aggregate amount of charges that the Company estimates it will incur in connection with the Plan, the Company expects that approximately $1.2 billion to $1.7 billion will be in future cash expenditures.” they read.
About $US1bn worth of charges will have taken place by the end of 2023.
Lendlease is the developer behind the Salesforce Tower which will rise out of Sydney Place at 180 George St.
TikTok was last year understood to be in talks to potentially lease about 4400sq m of space in the building. However the Chinese social media company, which is understood to hire about 300 local staff, was hit by its own lay-offs this week, with its parent company ByteDance announcing hundreds of lay-offs at Douyin — the Chinese version of TikTok.
Office developers have for months been counting on big tech companies to spur a return to CBD office markets but recent turmoil is likely to shift those views.
Salesforce had around 73,000 employees in 2022 before a 1000-staff cut landed in November. The local staff count, which is understood to be affected by the cuts, had grown 57 per cent from 1600 in 2020 to 2776 before both rounds of cuts.
The cuts arrive as the company’s co-chief executive Bret Taylor is leaving the company, due to depart on January 31.
One week after Mr Taylor announced his departure in November, Slack chief executive Stewart Butterfield, whom many had touted to be Mr Taylor’s replacement, also announced his exit from the company. Salesforce acquired Slack in July, 2021.
Mr Benioff asked employees to reach out to their former colleagues to offer support.
“The employees being affected aren’t just colleagues. They’re friends. They’re family. Please reach out to them,” he said.
Laid-off employees are understood to receive a minimum of four months’ pay, health insurance and career resources.
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