Confirming earlier reports of Meta laying off in masses, the Facebook-parent has confirmed the same, via a Mark Zuckerberg penned blog post. This comes amid consecutive slow growth quarters, billions of dollars worth failed metaverse bet and the minefield that is the world’s tech industry this year. The Facebook parent today created a rather forgettable historic moment, by reducing its headcount by over 11,000 on Wednesday.
These mass layoffs, which is Meta’s first ever since it came into being 18 years ago (it was known as Facebook then), affects 13% of its workforce across multiple departments in the company. CEO Mark Zuckerberg, in a blog post, announced the news, adding that he wanted to “take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.”
And if resorting to one of the biggest tech layoffs of the year isn’t enough for Meta, the company will be slashing its discretionary funding and extending its freeze in hiring throughout the first quarter of next year, so don’t expect that offer letter from Meta to come anytime soon. Each employee will be notified via email whether they will be fired or not – and if they are, then they can join information sessions and speak with someone to get their questions answered.
— Darran Marshall (@DarranMarshall) November 9, 2022
At the very least, the affected employees will not be walking away empty-handed. The company will pay them 16 weeks of base pay, along with two additional weeks for every year of service in Meta, along with payment for all Paid Time Off (PTO) which is remaining for the affected employees. They will also receive their dues by November 15, 2022 vesting. Additionally, Meta will cover the cost of their healthcare and that of their families for six months, along with three months of career support with an external vendor, including early access to unpublished job leads. Meta will provide immigration support for those who in the US on a job visa, as well as similar support for overseas employees.
This news, while adding to the turmoil that has been rocking the tech industry for the better part of the year, does not come as a surprise. 2022, with a struggling economy on the verge of a recession, a funding crunch, and adverse macroeconomic conditions, among others, have ensured that layoffs have become an alarmingly common occurrence as companies are cutting down on expenditure and slashing their budgets to become profitable. It is a far cry from the pandemic-induced growth that tech companies witnessed, and took full advantage of, over the past two years to grow at any cost.
Is #USRecession here?
After @twitter now @Meta CEO Mark Zuckerberg says over 11,000 of the company's employees will be let go.
"There is no good way to do a layoff"
He also said that Meta will extend hiring freeze through Q1 with a "small number of exceptions".#facebook #layoffs
— Sakshi Batra (@sakshibatra18) November 9, 2022
And Zuckerberg now blames the pandemic-induced boom for Meta’s current struggles, huge losses, and layoffs this year. “At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments,” he wrote in the blog post.
“Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” he added. While it is true that the pandemic had the side-effect of a rapid push to all things digital and more prominence of the e-commerce sector, it would have been prudent to assume that since the pandemic wasn’t a permanent fixture, businesses would gradually return to normal (that is, to the pre-pandemic levels) once lockdowns eased and offline work resumed.
It is clear that Meta did not make any provisions for such a scenario, and now, its business (and employees) will be paying the price. The company, after less-than-impressive earnings for this year’s quarters, expects its expenses to be around $100 billion for the coming year as it focuses more resources on AI, advertisements, business platforms and the metaverse. It will also restructure its business teams and transition to desk sharing for employees who spend most of their time outside the office.
It remains to be seen whether these measures help Meta become “a leaner and more efficient company,” as Zuckerberg puts it. Its stock has already taken big hits this year – its shares dropped by 70% this year while it lost $700 billion in market value. Some of it can be attributed to its huge investments in the metaverse and AR/VR tech – which has little to show for itself apart from continued losses that amount to billions.