Meta Chief Executive Mark Zuckerberg has announced eliminating 10,000 jobs in the company.
In a communication addressed to the company’s employees, Zuckerberg acknowledged that 2022 was a year of decline for the firm. He referred to it as a “humbling wake-up call,” especially due to the significant drop in revenue experienced during that period.
He informed the staff that apart from eliminating 10,000 jobs, they will also refrain from filling 5,000 job vacancies in the company.
According to Meta’s financial report, earnings were down 4% year-on-year in the three months to December 2022, though the company still managed to record a profit of over $23bn throughout the year.
Zuckerberg attributed the slowdown to various factors such as higher interest rates in the US, global geopolitical instability, and increased regulation. He cautioned that the company should brace itself for the likelihood that this economic downturn may persist for a long time.
Several firms, such as Google and Amazon, have been trying to strike a balance between reducing costs and staying competitive, leading to recent job cuts. Earlier this year, Amazon declared its intention to terminate over 18,000 jobs due to the unstable economy and rapid recruitment during the pandemic. Similarly, Alphabet, Google’s parent company, eliminated 12,000 positions. The tech industry’s job losses have been on the rise, with more than 128,000 jobs cut in the sector this year, as reported by layoffs.fyi, a website that monitors job losses in the tech industry.
Timeline for cuts:
Zuckerberg stated that the recruitment team would be the first to receive information about the cuts and would be informed on Wednesday. He also provided a timeline for informing other teams, mentioning that restructuring and layoffs in tech groups would be announced in late April 2023, followed by business groups in late May 2023.
He added that in a few cases, it might take until the end of the year to finalise these changes. The timelines for international teams would vary, and local leaders would provide more information to their respective teams.
It has become commonplace to hear about significant layoffs in the tech industry as companies try to manage their budgets. Many companies, including Meta, rely heavily on advertising revenue. However, they are currently facing a difficult situation with a decline in ad revenues from companies struggling to pay their bills and a user base with less disposable income, making ad space less valuable.
It is noteworthy that Meta is cutting jobs from its recruitment team in this latest round of layoffs. It is often said that Silicon Valley companies tend to over-hire for two reasons. First, to prepare for sudden growth, which can occur unexpectedly, and second, to retain top tech talent and prevent them from joining competitors. Unfortunately, both of these practices have become unaffordable luxuries.
Meta also faces the additional risk of Mark Zuckerberg’s significant investment in the metaverse, which is considered the next big thing. If successful, his company will regain its leading position, but if not, the more than $15 billion spent on it could vanish in a cloud of mixed reality smoke.
No new hiring:
Zuckerberg has announced that there will be no new recruitment until the restructuring is complete. He aims to flatten the organisation by removing multiple management levels.
Additionally, he has addressed the topic of hybrid work in his communication to staff. His statement that in-person software engineers perform better than remote engineers, particularly those in the early stages of their careers, suggests that hybrid work will be scrutinised during the current “year of efficiency.”