Salesforce insiders are bracing for another round of layoffs, largely targeting salespeople, to be carried out in February, after the end of its fiscal year.

The sales layoffs are expected as part of Salesforce's plans to lay off 10% of its workforce, according to eight current and former employees who spoke to Insider. But one person familiar with the matter said the company is evaluating whether an additional 10% of staff will be cut later this calendar year depending on financial performance. Another insider also reported hearing internal talk regarding potentially bigger layoffs. Sources requested anonymity because they are not authorized to speak about internal matters.

On January 4, the company announced plans to lay off 10% of its workforce as part of a broader restructuring plan meant to reduce costs, which could cut up to 7,000 people based on Salesforce's last published headcount number of 73,461 employees. Execs have repeatedly told employees, through emails and all-hands meetings, to expect rounds of layoffs to last for weeks, Insider reported.

"I didn't want to put a final line on it. I didn't want to say, 'This is it, one and done," Benioff told the company on an all-hands meeting last week, according to audio shared with Insider. 

Salesforce's fiscal year ends on January 31, and, like most companies who sell software to businesses, the fourth quarter is traditionally its biggest sales quarter. That's when sales people push their clients to sign contracts to make sales quotas. January, the insiders said, is when the company's sales teams close important deals and dole out territories and accounts for the new fiscal year, which begins February 1. 

But after Salesforce experienced big growth during the pandemic, a softening economy means companies are not buying cloud software at the same pace. In August, Salesforce trimmed its full-year revenue guidance to roughly $30 billion in annual sales, rather than roughly $31 billion it had predicted in May. Salesforce has a long history of upgrading its guidance, rather than trimming it.

So Salespeople were largely untouched by the company's first round of cuts earlier this month, sources told Insiders.

"The idea is to not screw the quarter any worse than it's going to be," a person familiar with the layoffs said.

Warnings on sales productivity

The sources who spoke to Insider didn't know how Salesforce will determine the layoffs, but some employees expect cuts could take into consideration performance against sales quotas.

In November, Salesforce cut hundreds of people, many of them in sales, for what it referred to as performance-based reasons. Salesforce employees at the time told Insider they believed the company set up its own salesforce for failure ahead of these cuts by using a quota system that penalized even top performers with unrealistic goals and difficult accounts.

And in a company all-hands call last week, CEO Marc Benioff spoke at length about "productivity" problems on the sales team, Insider reported.

Benioff reported that 96 percent of the company's annual contract value (a way to measure revenue from specific customers) was being delivered by 50 percent of sales account executives.

"Half of our salesforce is not really productive and a lot of them are our new folks," Benioff told the company on that call, according to audio shared with Insider.

Chief people officer Brent Hyder also said on the call that it's important for Salesforce to meet its "business objectives" for the fourth quarter, which sources told us felt like a hint that there would be more layoffs after the close of the fiscal year.

In the meantime, employees are anxiously waiting to find out which parts of the company will be impacted next. "Productivity is near zero," a person familiar with the layoffs said. 

Salesforce, sources say, has not provided much clarity on its timeline for layoffs, although it did confirm to Insider that more US cuts are in the works. Salesforce did not immediately respond to a request for comment on if sales will be cut in February and if increased layoffs are being discussed.

Are you a Salesforce employee or do you have insight to share? Contact Ellen Thomas via email (ethomas@insider.com) or send a secure message from a nonwork device on Signal: (+1-646-847-9416). Contact Ashley Stewart via email (astewart@insider.com) or via Signal (+1-425-344-8242).

ncG1vNJzZmivp6x7o8HSoqWeq6Oeu7S1w56pZ5ufony0rcueqp%2BnopiybrXNrKCdnaKoeqbEz56arWWjlrmmv4ytnJqlXaGuurvFn6pmoZ5is6au0a6Yq7FdZ31zf4xq