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Global cloud-computing powerhouse Salesforce Inc. was mum on Wednesday morning about the effect on its Indianapolis operations of a major restructuring plan that will eliminate about 10% of its workforce companywide and shrink its real estate footprint.
San Francisco-based Salesforce is the signature tenant in downtown Indianapolis’ 48-story Salesforce Tower, where it leases a significant chunk of space over multiple floors. The company employs nearly 80,000 people worldwide—about 2,300 of which work in Indianapolis.
On Wednesday morning, Salesforce filed paperwork with the U.S. Securities and Exchange Commission outlining the plan to lay off about 10% of its workforce and scale back on its office space to reduce costs. It was short on details about how specific divisions and bases of operation would be affected.
CEO Marc Benioff also sent a letter to employees briefly explaining the cuts.
“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,” Benioff wrote.
Asked for more detail by IBJ about Indianapolis operations, Salesforce officials referred reporters back to the SEC filing.
Salesforce leases about 250,000 square feet of space over 13 floors in the 1.1 million-square-foot Salesforce Tower downtown. It formerly occupied space in the five-story OneAmerica Gibson Building at 433 N. Capitol Ave. but has since vacated the building and subleased much of the space to other users.
Salesforce entered the Indianapolis market in 2013 by acquiring locally based cloud marketing firm ExactTarget for $2.5 billion. In 2016, it announced a plan to relocate much of its local operations into what was then called the Chase Tower at at 111 Monument Circle. It secured naming rights for the building, which added Salesforce signage in 2017.
The tower is owned by Oklahoma City-based Square Deal Investment Management, which bought it for $192.5 million in early 2021.
The software maker, whose tools for sales and customer service have made it one of the most high-profile cloud computing companies, is the latest in a growing list of big tech companies that have slashed their workforces in the past several months as huge sales booms experienced during the pandemic waned and a possible recession looms.
The company’s headquarters are in the tallest building in San Francisco, also called Salesforce Tower. It did not specify whether the tower would be affected by the reduction plans, and representatives declined to provide further details beyond what was mentioned in the filing and Benioff’s email.
In addition to Indianapolis and San Francisco, Salesforce leases office space in various locations throughout the United States, as well as office space in a number of countries in Europe, North America, Asia, South America, Africa and Australia.
Salesforce said some employees who were being laid off would get an email Wednesday morning and would hear from company leadership. Employees in the United States would get nearly five months of severance pay and benefits, Benioff wrote in his email.
The company anticipates $1.4 billion to $2.1 billion in charges related to its plan. That includes $1 billion to $1.4 billion in charges tied to employee transition, severance payments, employee benefits, and stock-based compensation. There will be $450 million to $650 million in charges for office closings. Approximately $800 million to $1 billion in charges are expected to occur in its fiscal fourth quarter.
Employee restructuring efforts are expected to be mostly complete by the end of Salesforce’s fiscal 2024. Actions related to its office closings are anticipated to be fully complete in fiscal 2026.
Tech companies hired aggressively during the pandemic to keep up with soaring demand, but Salesforce had been growing rapidly since at least 2018. Its workforce more than doubled between then and 2021.
Salesforce is not alone in its plans significantly cut staff. Facebook parent Meta announced it would lay off 11,000 people last fall, and Amazon is in the process of cutting about 10,000 people. Other big tech companies have instituted hiring freezes—all a dramatic turnabout from the past decade of explosive growth.
Shares in publicly traded Salesforce were up 3.49% to $139.48 in early afternoon trading Wednesday.
“This is a smart poker move by Benioff to preserve margins in an uncertain backdrop as the company clearly overbuilt out its organization over the past few years along with the rest of the tech sector with a slowdown now on the horizon,” Wedbush analyst Dan Ives wrote in a client note.
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Unmentioned in this article is Salesforce’s new 57-story, 821-foot tower in Chicago that boasts 1.2 million square feet of space. The Chicago Salesforce Tower was announced back in 2018, and has recently completed its construction. In addition to its new building, Salesforce announced plans to bring 1,000 new jobs to the Windy City, which news reports at the time said would serve as the company’s regional headquarters. Salesforce has already filled those 1,000 local jobs. For Indianapolis, the question is whether Salesforce will sacrifice jobs here for the sake of jobs in Chicago.
the other question that comes up is, why would Salesforce have a large presence here and in Chicago, where they are completing a new build?
Remember when Salesforce came to town, after buying ExactTarget? So much bluster then about how Indy would be its second global headquarters? Anybody believe that back then? Once again, Indy proves to be a sucker. And just continue to watch as Lilly expands dramatically outside of the state. We’ve spent too many years not investing in education and workforce development, and not the chickens are coming home to roost. Indy’s best days are waaaay behind it.
Downtown Indianapolis is stagnating, Even Jim Irsay recognizes that.
We haven’t had hardly any job creation downtown in the last 25 years.
Salesforce has been our only victory since they’ve came here. Other than Sales force, job creation downtown has been meager.
We haven’t even built one major office tower in over thirty years. Other than hotels, not one major building has went up. This because no jobs are being
created downtown.
Our other short coming was not turning IUPUI into an Independent University with an emphasis on research and development. We should have done that
no less than 40 years ago,
Neither Lilly nor Anthem have had one major expansion downtown probably in
the last thirty years or more.
Athem has become one of the largest insurance companies in the nation through
acquisitions and mergers. Yet not one major jobs announcement for downtown
Indianapolis. Same goes for Lily.
Downtown Indianapolis is stagnating. Without major job creations downtown
can not and will not progress.
Oh, and remember…this is my favorite part…they were going to build a giant new tower downtown to house their second global headquarters, Indianapolis?
“We’ve spent too many years not investing in education and workforce development, and not the chickens are coming home to roost. Indy’s best days are waaaay behind it.”
Spoken like an Indiana state legislator. Throw in the towel. Give up. Eat the seed corn. There is no future.
“Downtown Indianapolis is stagnating. Without major job creations downtown can not and will not progress.”
You’re forgetting about Elanco, but keep going.
Downtown Indy, like a lot of other downtowns, is going through massive shifts between hybrid work schedules, work from home, and the recession. Throw in our dependence on convention business and it’s been a rough period.
You want to blame Indianapolis officials? Sure. Fine. Just don’t forget the role that the Statehouse has. All Republican legislators are doing is importing the same ideas and perspectives that don’t work in their own hometowns to the entire state and … guess what? They still don’t work!
“We’re a low cost state and housing is affordable!”
Put another way, our infrastructure stinks and no one wants to live here.
Maybe what Republican legislators need to do is look at what’s working in Carmel and Fishers and Zionsville and take those ideas and import them to their corner of Indiana.
Maybe there’s a reason that Mitch Daniels nearly 20 years ago said it was time for a truce on the social issue legislation. Maybe it’s time for legislators to listen to those corporate leaders who are telling legislators the same thing today… as opposed to telling them “don’t dare speaking up about abortion, you won’t change a thing”.
Joe B.
Downtown is stagnating. We’ve had very little job creation downtown over the
last 25 years. It’s showing. Buildings looked run down so do the sidewalks.
You mentioned Elanco. That’s not creating new jobs. It’s moving jobs from one part of the metro to downtown.
City Market is practically on its last leg also. Vagrants and panhandlers hang out in front by the entrances. No one wants to wade through that.
Look at Monument Circle. More vacant space than ever before. It’s run down.
It looks worse than it ever has since I moved here in 84.
Our downtown office vacancy rate is higher now than during the pandemic.
We have not built one new office towervin almost 30 years because the
demand is not there.
Look at the area around Georgia Street and the convention center. It’s dirty and
dingy. It’s only getting worse. Not to mention all the panhandlers and homeless.
If Indianapolis doesn’t start taking steps immediately to turn this around, it will
be to late.
Three things needed to turn things around—
1). We need the private sector much more involved like they were in the 80’s.
Indianapolis was on a roll back then. Downtown was cleaner and Monument Circle was more vibrant. There was a true sense of optimism. Mover and shakers must be more involved.
2). We must be aggressive in promoting our city and downtown to bring jobs.
Treat downtown job creation as a BLOOD SPORT. No participation trophies.
3). Get the vagrants and the panhandlers off the streets.
The state legislature should provide the proper funding to help Indianapolis over
come our financial shortfalls from having to subsidize the Pacers and Colts
to the degree that we do. Indianapolis can NOT keep subsidizing both the
Simmons and Irsays to the degree that we do. That’s money. that is badly needed
to be reinvested in downtown.
Dallas, Atlanta, Charlotte, Nashville, Austin, all sell themselves everyday.
Indianapolis must start promoting and selling itself as a great place to live,
work. and play. I don’t mean cheesy awe shucks advertising.
I mean top notch marketing & advertising to promote our downtown.
Is Mayor Do-nothing Hogwash doing anything to keep these jobs in Indy. He’s so useless. Worst mayor indy has had in decades.
That would fall under holcombs purview IMO
Rumors are Salesforce reduced its occupancy in the Indy Salesforce Tower to two or three floors a while ago. Therefore, one can only assume reading the “tea leaves” they will be substantially reducing their footprint in Indianapolis in the near future when they can either dump their current lease and/or sub-let the space. And, rewinding the music that was played when Salesforce purchased Exact Target, Salesforce received an attractive tax reduction package from the City/County with the promise to consolidate their offices and bring the thousands of workers based in Indianapolis area downtown to benefit the local businesses and restaurants, etc. The Results, 22 high end restaurants have left Indianapolis, CVS closes one of its downtown locations located a hundred feet away from the Salesforce Building, the Mall downtown is a ghost town, and the City’s Leadership seems to think building and/or converting office Space to Apartments is a “success story”. And high end Convention Business is dead as high end restaurants leave and the few restaurants that replaced them focus on “bar food” and “desert” establishments. The next problem will be the airport, as part of the deal with Salesforce, a financial arrangement was established by the City/County to offer “direct flights” on non-cigar (50 to 70 passenger) planes that will most likely disappear shortly, also impacting the convention business in Indianapolis. If you look at the investments Nashville is undergoing in the next couple of years to their downtown area, Indianapolis is in real trouble. Very Sad, as this city was really on a growth path for a couple of decades.