Tech Layoffs: Meta to Layoff 10,000 of its current workforce. Meta, the parent company of Facebook has announced its second major round of job cuts within four months. The company plans to lay off 10,000 workers after Meta announced in November that it would eliminate approximately 13% of its workforce, or 11,000 jobs, marking the largest round of job cuts in the company’s history.
As of September 2022, Meta had reported a headcount of 87,314 employees. The previous job cuts, along with the current announcement, would bring the company’s headcount down to around 66,000, a reduction of approximately 25%.
CEO Mark Zuckerberg announced in a Facebook post on Tuesday that the layoffs would be implemented “over the next couple of months.”
“We expect to announce restructurings and layoffs in our tech groups in late April, and then our business groups in late May,” he wrote. In a “small number of cases, it may take through the end of the year to complete these changes.”
“Overall, we expect to reduce our team size by around 10,000 people and to close around 5,000 additional open roles that we haven’t yet hired,” .
Mark Zuckerberg CEO of Meta
Meta’s decision to downsize follows a trend among other big tech companies that have also undergone layoffs due to concerns over higher inflation, recession fears, and a shift in demand during the pandemic. This year, Amazon, Alphabet (Google’s parent company), and Microsoft have all confirmed major job cuts affecting tens of thousands of tech workers. Despite the job cuts, Meta’s shares rose by more than 4% in early trading following the announcement.
In November, when the first round of job cuts was announced, Mark Zuckerberg took responsibility for the company’s over-hiring during the pandemic. Between March 2020 and September of the same year, Meta almost doubled its headcount due to the surge in demand for digital services caused by the Covid-19 pandemic.
However, as pandemic restrictions eased and people returned to their offline lives, the situation changed for Meta and other tech companies. Meta’s core business was also impacted by privacy changes implemented by Apple and advertisers tightening budgets amid recession fears.
In a post on Tuesday announcing the latest cost-cutting efforts at Meta, Zuckerberg called the last year “a humbling wake-up call.” He acknowledged that the world economy changed, competitive pressures grew, and their growth slowed considerably.
He also said that it’s essential to prepare for the possibility that this new economic reality will continue for many years. Zuckerberg emphasized that higher interest rates lead to a leaner economy, more geopolitical instability leads to more volatility, and increased regulation leads to slower growth and increased innovation costs.
In Meta’s most recent quarterly earnings report, the company posted a sharp drop in profits and reported its third straight quarterly decline in revenue. During the earnings call, Zuckerberg promised investors that 2023 would be the “year of efficiency” for the company, following years of heavy investment in growth and a more immersive version of the internet called the metaverse.
Zuckerberg also hinted that more job cuts could be coming, stating that the company would be more proactive about cutting projects that aren’t performing or may no longer be as crucial. He also emphasized his focus on increasing the efficiency of how the company executes its top priorities by flattening its organizational structure and removing some layers of middle management to make decisions faster.
Why the Massive Tech Layoffs?
The announcement of the latest round of layoffs at Meta highlights the challenges faced by tech companies as they navigate the shifting economic landscape. With pandemic-induced demand for digital services slowing down, these companies are finding it harder to sustain their growth and profitability. Inflation, recession fears, and increased regulation are also putting pressure on their bottom lines, leading to cost-cutting measures like job cuts.
Meta’s recent struggles have been particularly acute. As the parent company of Facebook, Instagram, and WhatsApp, it has faced increased scrutiny over issues like privacy, misinformation, and the spread of hate speech. Its core business of selling ads has also been affected by changes implemented by Apple, which have made it harder for companies like Meta to track users’ online behavior for ad-targeting purposes.
Despite these challenges, however, Meta and other Big Tech companies are continuing to invest heavily in new technologies like the metaverse, a more immersive version of the internet that promises to revolutionize the way we live, work, and play. For Meta, the metaverse represents a major opportunity to diversify its revenue streams and create new business models that are less reliant on ad sales.
As Meta and other tech giants work to adapt to the new economic reality, they will need to find ways to balance the demands of growth and profitability with the need to be responsible corporate citizens. This will require a renewed focus on issues like privacy, security, and social responsibility, as well as a willingness to embrace new technologies and business models that can help them thrive in an uncertain and rapidly changing world.