Is Meta laying off its 11000 talented employees? unfortunately, YES. The biggest major employment layoffs in the history of the digital behemoth have been announced by Meta on Wednesday: 11,000 people will be laid off. According to Meta, roughly 13 percent of its workforce will be laid off , in what will likely be the biggest employment layoffs in the history of the business.
Departments and regions were affected, but some, notably the business and recruiting teams, were more severely hit than others. “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1” said CEO Mark Zuckerberg in a blog post.
Reasons for Meta Layoffs
The layoffs occur as Meta faces numerous threats to its main business and places a risky and expensive wager on shifting to the metaverse. It also happens to coincide with a wave of recent layoffs at other tech companies, such as Twitter, as the booming industry responds to high inflation, rising interest rates, and concerns about an impending recession. Under the leadership of its new owner Elon Musk, Twitter has let hundreds of staff go.
The world was moving quickly online at the time of Covid, and the e-commerce boom caused an astronomical increase in revenue. Many individuals believed that this acceleration would last forever and carry on long after the pandemic was over. Zuckerberg, therefore, decided to greatly boost the investments because he felt the same way. Unfortunately, this did not pan out the way he expected. Online sales have not only resumed their previous patterns, but Meta’s revenue has also fallen far short of what the team had anticipated due to the financial slump, increasing competition, and loss of ad signal. “I got this wrong, and I take responsibility for that” says Mark Zuckerberg.
Why is Meta struggling so hard
Apple’s privacy reforms, advertisers’ reduced advertising spending, and increased competition from upstart rivals like TikTok have all hurt Meta’s primary ad sales business. While everything is going on, Meta has been investing billions to create the metaverse, a futuristic version of the internet that is still years away from becoming widely used. As of now in 2022, Meta has lost $9.4 billion on its metaverse technology, and it anticipates spending significantly more in the future. In the meantime, Horizon Worlds, the company’s primary metaverse social platform, is so unreliable and unpopular that Meta’s own managers have had to intimidate staff into using it.
Meta needs to become more capital efficient in this new context. A smaller number of high priority growth areas, such as the Meta AI discovery engine, advertising and business platforms, and its long-term metaverse vision, are receiving more of the company’s resources. The corporation has reduced expenditures throughout its operations, including budgets, benefits, and the size of its real estate portfolio. To improve productivity, Meta is reorganising its teams. Zuckerberg added, “But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go.”
Additional changes planned by Meta
Layoffs should only be used as a last resort, hence Mark Zuckerberg chose to control other cost-related factors first. Overall, this will result in a significant cultural shift in the way Meta conducts business. For those employees who already spend the majority of their time outside of the office, the company is migrating to desk sharing as it reduces its real estate footprint. “We’ll roll out more cost-cutting changes like this in the coming months”, said Mark Zuckerberg.
With a few exceptions, Zuckerberg is also extending the company’s hiring moratorium through Q1.”I’m going to watch our business performance, operational efficiency, and other macroeconomic factors to determine whether and how much we should resume hiring at that point.” Zuckerberg mentioned in the post. In the event of a persistent economic slump, this will enable Meta to manage its cost structure. Additionally, it will set the business on the way to a cost structure that is more effective than the one recently described to investors.
Zuckerberg wrote that employees in the US will receive 16 weeks of base salary plus an additional two weeks for each year of service, six months of health insurance, and assistance with finding new employment and resolving immigration concerns. Thanking the employees Zuckerberg added “This is a sad moment, and there’s no way around that. To those who are leaving, I want to thank you again for everything you’ve put into this place. We would not be where we are today without your hard work, and I’m grateful for your contributions.”
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