Meta CEO Mark Zuckerberg announced Tuesday that the company plans to reduce its workforce once again by laying off around 10,000 employees and closing about 5,000 job openings that have not been filled.
The move came amid growing economic turmoil in the tech industry, pushing companies to cut headcounts as part of measures of cutting costs. Meta was severely hit by revenue drop, which saw the social media behemoth lost more than half of its market value in 2022.
Zuckerberg disclosed the plan in his “Year of Efficiency,” announcement, where he outlined steps Meta is taking to reduce increasing losses as the company’s digital ad sales slows down.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
“Over the next couple of months, org leaders will announce restructuring plans focused on flattening our orgs, canceling lower priority projects, and reducing our hiring rates,” the CEO said in a statement posted to his Facebook page.
Zuckerberg said he will let members of the company’s recruiting team know if they are impacted by the decision by tomorrow. But tech team members won’t know the status of their jobs until April, while business group employees won’t find out until May. Some workers won’t be told if they’ll keep their jobs until the end of the year.
“At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years,” Zuckerberg said. “Higher interest rates lead to the economy running leaner, more geopolitical instability leads to more volatility, and increased regulation leads to slower growth and increased costs of innovation. Given this outlook, we’ll need to operate more efficiently than our previous headcount reduction to ensure success.”
The CEO said Meta will support people in the same ways it has before and treat everyone with the gratitude they deserve. He added that he wants managers to take on up to 10 employees as their direct reports and is calling on workers to meet in person moving forward more often.
In November, Meta announced it was cutting 11,000 jobs, joining other tech giants reducing headcounts as the pandemic-induced economic boom dies down. Apple, Amazon, Microsoft, Twitter and others have also been forced to cut workforce. The tech companies had over-hired during the pandemic as life shifted online, creating massive digital economic boom.
Gingered by the economic boom, tech companies went on hiring spree. Meta grew its headcount by 93.5% from Q4 2019 to Q3 2022.
However, the economic growth saw a drastic drop as in-person activities grows, following the removal of safety restrictions designed to halt the spread of covid-19.
But Zuckerberg’s major move to save its fortune came in 2021 when he changed the company’s name from Facebook to Meta. He has also unveiled other plans, which includes a shift of focus to short-form videos and developing metaverse, as part of efforts to revamp Meta.
Facebook parent Meta Platforms will lay off roughly 10,000 employees over the next couple of months and close off a further 5,000 open jobs, the company announced in a blog post. The move marks the social media giant’s second major round of job cuts in recent months after it laid off 11,000 workers, or 13% of its staff, in November. Chief Executive Mark Zuckerberg said Meta — which owns Instagram and WhatsApp — is looking to “make its organization flatter” by removing multiple layers of management and cutting certain projects, as part of “the year of efficiency.”
Recruitment teams will be impacted first, followed by restructuring and layoffs in tech groups in April and cuts on business teams in late May. Meta had dramatically expanded its employee base over the pandemic but has since seen a slowdown in advertising revenue. Tens of thousands of workers have been laid off across the tech sector this year. (LinkedIn News)
However, analysts have hailed his cost-cutting plans as the best way to turn Meta’s fortune around. Yahoo Finance noted Jefferies analyst, Brent Thill, applauding Meta’s decision to cut more jobs as a necessity.
“We believe more headcount reductions are needed to offset the last 2 years of excess hiring,” Thill wrote on March 7. “Meta grew its headcount by 20% in ’22, which led to revenue per employee declining 21%. Hence, Meta’s reported plans to right size its headcount, laying off ‘thousands’ of employees are warranted.”
Zuckerberg said during Meta’s last earnings call that the company will execute its “Year of Efficiency” plan by implementing “flatter” and “learner” measures in running the company.
“As I’ve talked about efficiency this year, I’ve said that part of our work will involve removing jobs — and that will be in service of both building a leaner, more technical company and improving our business performance to enable our long term vision,” he said.
Meta shares jumped more than 6% at the market open on Tuesday.