Meta Platforms Announces Second Round of Mass Layoffs Amid Economic Downturn
Meta Platforms, the parent company of Facebook, has announced that it will be cutting 10,000 jobs as part of a wider restructuring plan. This move makes it the first big tech company to announce a second round of mass layoffs as the industry prepares for a deep economic downturn. The news has caused Meta shares to jump by 6%.
Wider Restructuring Plan
The job cuts are part of a wider restructuring plan that will see Meta cancel hiring plans for 5,000 openings, scrap lower-priority projects and flatten layers of middle management. The company’s CEO, Mark Zuckerberg, warned staff in a message that the economic downturn could last for years, and the company needs to prepare accordingly.
Zuckerberg’s Promise for “Year of Efficiency”
In response to the economic downturn, Zuckerberg has promised to turn 2023 into the “Year of Efficiency”. Meta’s recent action results in the company anticipating expenses for 2023 to fall within the range of $86 billion to $92 billion, which is a decrease from the previous projection of $89 billion to $95 billion.
Flattening the Organization
According to Zuckerberg, Meta will adopt a flatter organizational structure by eliminating several layers of management and requiring managers to function as individual contributors with fewer than 10 direct reports. As a result, the company does not anticipate expanding its workforce as rapidly and intends to optimize each manager’s abilities while reducing fragmentation within the organization.
Struggling with Post-pandemic Slump in Advertising Spending
Meta, which is investing heavily in creating the advanced metaverse, has faced challenges due to a decline in advertising expenditures from companies concerned about the economic climate following the pandemic. In November 2022, the company downsized by 11,000 jobs, which was its first significant reduction in force in its 18-year history. At the end of 2022, its workforce numbered 86,482, representing a 20% increase from the previous year.
Tech industry layoffs
According to layoff-tracking site layoffs.fyi, the tech industry has laid off nearly 290,000 workers since the start of 2022, with about 40% of the layoffs occurring this year. Companies such as Goldman Sachs, Morgan Stanley, Amazon and Microsoft have also announced mass job cuts due to rising interest rates and economic uncertainty.
In conclusion, the economic downturn has caused Meta Platforms to announce a second round of mass layoffs, along with a wider restructuring plan. Zuckerberg’s promise for the “Year of Efficiency” and the company’s plans to flatten its organization reflect the need to prepare for a prolonged economic downturn.
