Facebook parent Meta sacks over 11,000 employees
This is the first major round of layoffs at Meta, and is being considered as the most drastic one since Facebook began in 2004.
Meta Platforms Inc, the parent entity of social media platform Facebook, has sacked over 11,000 employees and is set to extend the freeze it has imposed on new hiring. This is 13 percent of the company’s workforce.
“I want 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,” Meta chief executive officer Mark Zuckerberg said.
This is the first major round of layoffs at Meta, and is being considered as the most drastic one since Facebook began in 2004, reflecting a sharp slowdown in the digital advertising market due to the economic downturn.
Presently, it is unclear how these layoffs affect Meta’s India business, and how many employees in the country are impacted. Meta has about 300-400 employees in India, people familiar with the matter told Moneycontrol.
That said, Meta recently witnessed a change in the top deck of its India unit with the country’s managing director Ajit Mohan leaving the firm after a nearly four-year stint to join rival Snap. Manish Chopra, Director and Head of Partnerships for Facebook India (Meta) is currently leading the firm on an interim basis.
The social networking giant has doubled its profits and witnessed a significant surge in its total revenue in India for the financial year 2021-22. Net profit rose to Rs 297 crore for the financial year, a 132 percent increase from Rs 128.2 crore a year back.
Total income grew to Rs 2,324 crore for the financial year, posting a 56.5 percent jump from Rs 1,485.1 crore in the previous financial year. The gross advertising revenue saw a 74 percent on-year surge to Rs 16,189 crore during the period.
In his message to employees, Zuckerberg said that they are taking additional steps to become a leaner organisation by cutting discretionary spending as well as extending its hiring freeze till the end of Q1. Meta follows the calendar year globally for its results, and therefore the hiring freeze is likely to be in place till March 2023, with a small number of exceptions.
Zuckerberg’s statement said that while workforce reductions will be across the board, divisions such as recruiting will be disproportionately affected and business teams too are being restructured. The access of employees being laid off has also been revoked.
He attributed the decision to lay people off to a significant increase in investments that had been made due to the pandemic. “…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…,” he said, which turned out not to be the case.
“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. I got this wrong, and I take responsibility for that,” he said.
Now, the CEO said the company has to become more capital efficient, and that it has shifted more resources to a “smaller number of high priority growth areas”. These are areas such as the AI discovery engine, ads and business platforms, and the metaverse.
Meta said it has cut costs by scaling back budgets, reducing perks, reducing real estate footprint and is restructuring teams as well.
“But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go,” Zuckerberg said.
Assistance to laid-off employees
He also outlined what will be given to affected employees as part of their severance. Support outside the US will be similar, he said, and there will be separate processes that take into account local employment laws.
Employees who are being laid off will get their base pay for 16 weeks of base pay with two additional weeks for every year at the company, all remaining PTO paid and health insurance for six months. The statement said that career support will be provided for three months with an external vendor, and immigration support for employees on visa.
Numerous Indians in the US work on an H-1B visa. Under H-1B visa regulations, workers get only a 60-day grace period, during which time they have to find new work to continue to stay in the country.
“I know this is especially difficult if you’re here on a visa. There’s a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need,” the statement reads.
On Meta’s future hiring, Zuckerberg said he is going to watch the business performance, operational efficiency, and other macroeconomic factors to “determine whether and how much we should resume hiring at that point”.
Zuckerberg said they are also reining in costs by shrinking its real estate footprint and moving to a desk-sharing system for people who spend much of their time outside the office, and more cost-cutting measures will be taken in the coming months.
In 2021, in India the company picked up 90,000 square feet of office space in BKC, Mumbai and 130,000 square feet in Gurugram.
“I’m currently in the middle of a thorough review of our infrastructure spending. As we build our AI infrastructure, we’re focused on becoming even more efficient with our capacity. Our infrastructure will continue to be an important advantage for Meta, and I believe we can achieve this while spending less,” Zuckerberg said.
He noted that these changes are being made since the company’s revenue outlook is lower than they expected at the beginning of this year and they want to make sure the company is operating efficiently across both Family of Apps and Reality Labs segments.
Slew of tech layoffs
With these job cuts, Meta will join a slew of other tech firms that have announced layoffs and hiring freezes in response to rising inflation and macroeconomic headwinds. This includes Stripe, Amazon, Lyft, Coinbase, Apple, and Snap among others.
Twitter laid off nearly half of its 7,500-strong workforce last week under the new owner Elon Musk. Snap also cut about 20 percent of its workforce and scrapped several projects such as Snap Originals, Minis, Games, and Pixy besides winding down standalone apps Zenly and Voisey in August 2022.
