Automation comes for tech jobs in the world capital of AI

SAN FRANCISCO — One gray morning this week, a crowd of parents and baby-laden strollers gathered for a sing-along in Salesforce Park, five acres of public green space on the roof of the Salesforce Transit Center in the shadow of the 1,000-foot Salesforce Tower.

Among them was a local dad and software engineer who had learned days earlier that Salesforce was laying him off. The $240 billion cloud software company told 262 employees in San Francisco they were being let go, according to a state filing this week.

The purge is the latest in a series of layoffs at Salesforce as CEO Marc Benioff, a prominent Bay Area philanthropist, has made himself the poster billionaire for the idea that artificial intelligence is disrupting employment — and that it’s a good thing.

His zeal is turning the company, and potentially San Francisco, into a leading indicator of whether industry hopes for artificial intelligence will come true, and what that could mean for the sector’s well-paid workers.

Just about every tech leader is bullish on AI, but Benioff has been ahead of the pack when it comes to talking about the potential for it to transform or even replace what workers do. He told Bloomberg in June that the technology was already doing as much as 50% of the work at Salesforce.

Benioff said in a recent podcast interview with investor Logan Bartlett that the productivity gains from AI meant he needed 4,000 “less heads” in customer support. “This is the most exciting thing that’s happened, in the last nine months for Salesforce,” the CEO said.

Benioff’s embrace of AI disruption has helped make Salesforce a prominent example of a recent shift in Silicon Valley away from lavish perks and flexible working conditions toward layoff threats and stricter management.

Benioff refers to his staff as “Ohana,” a Hawaiian term for family, and over the years established for Salesforce a reputation for being people-oriented, with cute and furry mascots, deep civic engagement and an important role as San Francisco’s largest private employer.

As AI has rocked the software industry, the company’s stock price has struggled and Benioff has appeared to put embracing automation ahead of those warm-and-fuzzy vibes.

The software engineer in the park, who spoke on the condition of anonymity to protect his career, wasn’t sure he could be so easily be replaced by AI. Asked whether he believes Salesforce’s conspicuously community-oriented culture still exists, he smiled and said, “Less so now.”

Many large tech firms have cut staff since interest rates began to rise in 2022, as leaders have increasingly focused on efficiency. Benioff’s recent excitement about what he has called the “radical augmentation” of the workforce stands out.

Microsoft chief executive Satya Nadella, who has laid off more than 15,000 staffers this year, said in a July letter to staff that the job losses required to pivot “from a software factory to an intelligence engine” were “weighing heavily on me.” Amazon CEO Andy Jassy warned staff in June that it will “need fewer people doing some of the jobs that are being done today.”

The three companies, like many tech rivals, are trying to sell customers AI tools promised to increase productivity and disrupt work while rolling out similar tools inside their own workforces.

Salesforce unveiled a new AI product in October called Agentforce claimed to help customers accomplish more tasks in less time, for example by helping salespeople respond to customer leads that would previously have gone unanswered. PepsiCo is one of 12,500 Agentforce customers that will, according to a news release from the soda maker, become part of the “digital labor revolution.”

In his podcast interview, Benioff credited internal use of Agentforce for reducing his need for support agent “heads.”

Like other technologies, AI “has always been associated with both destroying jobs and creating jobs,” said Stanford economist Erik Brynjolfsson who studies its impact on the labor market. At tech firms, both seem to be happening at once, he said.

“(For) some of the entry level jobs the demand has fallen, but for the more senior jobs for AI experts, demand is soaring.” Brynjolfsson said.

Salesforce cut about 8,000 roles in 2023 and 1,000 in 2024. Annie Vincent, a company spokeswoman, said the reductions will affect Salesforce’s global workforce. Some are from vacated roles that weren’t backfilled, or staff who found other jobs at the company, which she said employees can do with help from a tool called Career Connect that sends notifications when new Salesforce roles pop up that fit their skills.

When asked how much layoffs and attrition each contributed to staff reductions, Vincent said, “We continuously assess our structure and rebalance as needed to best serve our customers and fuel growth areas.”

In 2024, Salesforce employed 10,000 people in San Francisco, according to local news reports. Vincent declined to say how many work there today.

If a radical transformation in tech work is underway, no city is likely to feel its effect more than San Francisco, which Salesforce helped to make tech’s capital city when it established a headquarters here 25 years ago.

“Over the last quarter century, Salesforce has become the anchor employer … For well over a decade, they have been the largest private employer in the city, and San Francisco has benefited from that in a multitude of ways,” said Sean Elsbernd, president of SPUR, an urban planning group and a former member of the city’s Board of Supervisors.

Elsbernd said he hasn’t seen signs that AI is yet threatening that relationship. But if it did, “I would be very concerned for the city,” he said.

Salesforce Tower, the tallest building in San Francisco’s skyline, opened in 2018 with much fanfare. Two years later, the coronavirus pandemic threatened the idea that downtown tech workers would provide some of the stimulus needed to address the city’s inequality and homelessness while also supporting local bakeries, bars and spendy salad joints.

As the city faced first-in-the-nation office vacancies and rumors of a looming urban “doom loop,” Salesforce tried to hold back the tide by ordering workers back to the office. In a 2024 interview, Benioff said he could “feel a new wave of momentum in the city” and predicted an “AI boom loop.”

He was already thinking about efficiency gains: Earlier that year Salesforce CFO Amy Weaver said on an earnings call that the company was targeting its AI hiring in markets with a “low cost of living.”

Anne Taupier, San Francisco’s executive director of the Office of Economic and Workforce Development, said Salesforce continues to be an economic boon to the city. Its annual Dreamforce conference will take place in October and last year brought 45,000 visitors to San Francisco.

“Our office is working with the Salesforce HR team to ensure that any impacted employees have access to available career support resources,” Taupier said in an email statement.

News of the company’s latest San Francisco layoffs came after Salesforce offered lower than expected sales projections in its quarterly earnings last week. Some analysts took that as a suggestion that its AI products may not immediately become blockbusters. The company’s shares have fallen 26% this year.

Brynjolfsson, the Stanford economist, said it was early to expect definitive results from the technology. “Anyone who thought you could just buy AI and instantly get a payoff is disappointed right now,” he said.

Benioff remained undaunted. “This is just the beginning of the most transformative time in our industry ever,” he said on the earnings call last week. “I’ve never been more excited about anything in my entire career.”