Breaking: 11,000 employees at Meta face the axe as earnings fall
Closely on the heels of Twitter's massive downsizing, tech giant Meta has announced that more than 11,000 of its employees will be laid off, The New York Times has reported. CEO Mark Zuckerberg has confirmed in a letter addressed to all employees, affected by the move.
The jobs cuts will go into effect starting Wednesday and affected employees will get four months of pay as severance. This is the first major reduction of headcount at Meta, formerly Facebook, in its 18-year history, Business Standard reported.
Meta is also looking at other avenues of cost savings, such as reduction in discretionary spending, freezing hiring through Q1 of 2023, reducing perks, and shrinking real estate footprint, the letter said. However, these would not bring down expenses in line with the expected revenues, and this is why the company had decided to let people go.
How did it come to this at Meta?
Around this time of the year in 2021, Mark Zuckerberg was buoyant about building a new digital future called the metaverse and even rebranded the company to reflect the new vision.
A year later, Meta's sales revenues have dipped by four percent to $27.71 billion in the third quarter while its expenses have jumped by 19 percent to $22.1 billion, year on year for the same quarter, CNBC said in its report.
Taking responsibility for the events at Meta, Zuckerberg said in the letter that he assumed the "outsized revenue growth" seen during the pandemic would continue and e-commerce trends would remain high. However, life returning to normal, online commerce has subsided and macroeconomic downturn and ads signal loss have meant that revenues have been much lower than expected.
Without specifying the metaverse, Zuckerberg admitted that he had taken the decision to "significantly increase investments" but now the company needed to become more "capital efficient".
How is it different from Twitter's layoff?
Becoming capital efficient is the need of the hour at companies in the tech world as revenues have dipped across the board. Twitter which was acquired by the world's richest person, Elon Musk, who also announced job cuts on Friday. However, the management of the laying off process appears more streamlined at Meta, which in absolute numbers are letting go of thrice as many people.
In the statement to affected employees, Zuckerberg added that the company would cover health insurance for employees and their families for the next six months, and provide three months of career support through an external vendor.
For those working on a visa in the U.S. offices, there is a notice period and some grace visa period that allow affected employees to make plans. Iimmigration specialists will also be roped in guide people based on their needs. Those working in offices, outside the U.S. can also expect similar support in accordance to local laws, the letter added.
Like Twitter, employees will soon learn their fate through email and access to Meta systems has been revoked for those leaving the company today. However, email addresses will be kept active throughout the day, so that everyone can say their farewell, the social media company's CEO said in the letter.