Salesforce’s third-quarter financial report Wednesday showed a solid 14% year-over-year increase in revenue, beating analysts’ expectations, but was overshadowed by the announcement that company co-CEO Bret Taylor will be stepping down. The move will leave company  founder Marc Benioff once again running the company as lone CEO.

Salesforce’s revenue growth, totalling $7.8 billion for the quarter ending October 31, was largely driven by subscription and support revenue, which increased by 13% year-on-year to $7.2 billion, while professional services and other revenues saw a 25% increase over the same period, to $604 million.

Earlier in November, the cloud-based CRM software maker announced it would cut about 950 jobs from its global workforce, facing pressure to cut costs since activist hedge fund Starboard Value took a stake in the company and immediately called for the company to increase its margins.

However, despite the strong third quarter performance, Salesforce’s share price fell more than 9% in Thursday morning trading, as much of the commentary from industry observers centered around Taylor’s resignation.

Speaking to analysts on a conference call after the results had been published, Benioff said “this quarter has been further proof of our commitment to profitable growth, continuing our operating margin growth, continued focus on our revenue growth, continued focus on our market share growth.”

It was on this same call that Benioff announced the news that Taylor had made the decision to step down from his role as co-CEO of Salesforce.

“While there is absolutely no easy time for a transition like this, I really do feel that now is the right time for me to return to my entrepreneurial roots, particularly given the technology landscape and the economy going through such tectonic shifts,” Taylor said.

He added that he would remain as co-CEO through the end of the fiscal year to ensure a smooth transition and a “a strong close to the quarter.”

Taylor first joined Salesforce in 2016 when the CRM software provider acquired his previous company, Quip, and has since held the position of president and chief operating officer at Salesforce prior to his promotion to co-CEO last year. He also played a key role in Salesforce’s $27 billion acquisition of Slack in 2020.

In addition to his role at Salesforce, Taylor was also chairman of the board at Twitter when Elon Musk tried to terminate his agreement to buy the social media platform for $44 billion. After publicly announcing Twitter would pursue legal action to enforce the purchase, Taylor lost his role as chairman when Musk eventually took over and immediately dissolved Twitter’s board.

This is not the first time that Salesforce a co-CEO has chosen to leave the company. In 2018, Benioff named Keith Block co-CEO and he remained in the position until he stepped down in 2020.

“Co-CEO arrangements are historically challenging long-term relationships, but it seems to be one which Marc seems to favor for succession planning as well as allowing him to pursue broader philanthropic interests,” said Jason Wong, VP analyst at Gartner.

He added that the co-CEO situation, which started with Keith Block, also allows Benioff to scale executive responsibilities, given the size and growth of Salesforce which now has several business units in MuleSoft, Tableau and Slack, all of which have their own CEOs.

“Marc is still very much committed to running Salesforce and has set several milestones, such as surpassing SAP as the largest enterprise applications vendor by revenue this past year and a target of $50B in annual revenue by 2026,” Wong said. “I believe he would want to be at the helm as these milestones are achieved.” While it’s unlikely Benioff will announce Taylor’s successor in the immediate future, Wong said he would not be surprised to see another co-CEO appointment from within.

CRM Systems, Technology Industry

The end of the Great Resignation — the latest buzzword referring to a record number of people quitting their jobs since the pandemic — seems to be nowhere in sight.

“New employee expectations, and the availability of hybrid arrangements, will continue to fuel the rise in attrition. An individual organization with a turnover rate of 20% before the pandemic could face a turnover rate as high as 24% in 2022 and the years to come,” says Piers Hudson, senior director in the Gartner HR practice.

The Global Workforce Hopes and Fears Survey, conducted by PwC, predicts that one in five workers worldwide may quit their jobs in 2022 with 71% of respondents citing salary as the major driver for changing jobs.

The challenge for IT leaders is clear: With employees quitting faster than they can be replaced, the rush to hire the right talent is on — so too is the need to retain existing IT talent.

But for Kapil Mehrotra, group CTO at National Collateral Management Services (NCMS), high turnover presented an opportunity to cut costs of the IT department, streamline its operations, and find a long-term solution to the perpetual skills scarcity problem.

Here’s how Mehrotra transformed the Great Resignation into a new approach for staffing and skilling up the commodity-based service provider’s IT department.

Losing 40% of domain expertise in one month

From an IT infrastructure standpoint, NCMS is 100% on the cloud. The company’s IT department comprised 27 employees, with one person each handling business analytics and cybersecurity, and the rest of the team split between handling infrastructure and applications. The applications had been transformed into SaaS and PaaS environment.

With a scarcity for experienced and skilled resources in the market and companies willing to poach developers to fulfill their needs, it was just a matter of time before NCMS too saw a churn in its IT department.

“In March, 10 of the 27 employees from the IT department resigned when they received job offers with substantial hikes. At that time, application migration was under way, and our supply chain software was also getting a major upgrade. The sudden and substantial drop of 40% in the department’s strength made a significant impact on several such high-priority projects,” says Mehrotra.

“Those who left included an Android expert and specialists in the fields of .Net and IT infrastructure. As the company had legacy systems, it became tough to hire resources that could manage them. Nobody wanted to deal with legacy solutions. The potential candidates would convey their inability to work on such systems by showing their certifications on newer versions of the solutions,” he says.

Besides, whatever few skilled resources available for hire were expecting exorbitant salaries. “This would have not only impacted our budget but would have also created an imbalance in the IT department. HR wanted to maintain the equilibrium that would have otherwise got disturbed had we hired someone at very high salary compared to existing team members who had been in the company for years,” says Mehrotra.

Nurturing fresh talent in-house

So, while most technology leaders were scouting for experienced and skilled resources, Mehrotra decided to hire fresh talent straight from nearby universities. Immediately after the employees quit, he went to engineering colleges in Gurgaon and shortlisted 20 to 25 CVs. Mehrotra eventually hired four candidates, taking the depleted IT department’s head count to 21.

But Mehrotra now had two challenges at hand: He had to train the freshers and kickstart the pending high-priority projects as soon as possible.

“I told the business that we wouldn’t be able to take any new requirements from them for the next three months. This gave us the time to groom the freshers. We then got into a task-based contract with the outgoing team members. As per the contract, the team members who had exited were to complete the high-priority projects over the next months at a fixed monthly payout. If the project spilled over to the next month, there would be no additional payout,” Mehrotra says.

“Adopting this approach not only enabled completion of the projects hanging in the limbo, but also provided the freshers with practical and hands-on training. They ex-employees acted as mentors for the freshers who were asked to write code and do research. All this helped the new employees in getting a grip on the company’s infrastructure,” he says.

In addition, Mehrotra also got the freshers certified. “One got certified on .Net while another on Azure DevOps,” says Mehrotra.

New recruits help slash costs, streamline operations

The strategy of bringing first-time IT workers onboard has helped Mehrotra in slashing salary costs by 30%. “The new hires have come at a lower salary and have helped us in streamlining the operations. We are getting 21 people to do the work that was earlier done by 27 people. The old employees used to work in a leisurely manner. They used to enter office late, open their laptops at 11 a.m., and take regular breaks during working hours. The commitment levels of freshers are higher, and they stay in a company for an average of three years,” says Mehrotra.

After three months of working with the mentors, the freshers came up to speed. “We started taking requirements from business. The only difference working with freshers is that as an IT leader, I have stepped up and taken more responsibility. I make sure that I participate even in normal meetings to avoid any conflicts. Earlier what got completed in one day is currently taking seven days to complete. Therefore, we take timelines accordingly. We are currently working at 70% of our productivity and expect to return to 100% in the next three months,” says Mehrotra.

Sharing his learnings with other IT leaders, he says, “There will always be a skills scarcity in the market, but the time has come to break this chain. Hiring resources at ever- increasing salaries is not a sustainable solution. The answer lies in leveraging freshers. Just like big software companies, CIOs also must hire, train, and retain freshers. We must nurture good resources inhouse to bridge the skills gap.”  Mehrotra is now back to hiring and has approached recruitment consultants with the mandate to fill 11 positions, which are open to all, including candidates with even six months to a years’ experience.

IT Skills