Meta Platforms, the parent company of Facebook, announced on Tuesday that it will cut 10,000 jobs, making it the first major technology company to declare a second round of mass layoffs amid concerns of a deep economic downturn. The news has led to a 6% increase in Meta's shares. These job cuts are part of a broader restructuring that will involve abandoning the hiring plans for 5,000 openings, terminating low-priority projects, and flattening out layers of middle management.
In a message to staff, Chief Executive Mark Zuckerberg said, "I think we should prepare ourselves for the possibility that this new economic reality will continue for many years." The fear of an economic downturn due to rising interest rates has prompted many businesses in the United States to carry out mass layoffs. These have included Wall Street banks such as Goldman Sachs and Morgan Stanley, as well as large technology companies such as Amazon.com and Microsoft.
Meta, which is investing billions of dollars to create the futuristic metaverse, has struggled with the post-pandemic drop in advertising expenditure from companies concerned about the economic outlook. Zuckerberg has promised to make 2023 the "Year of Efficiency" in response. With this new move, Meta anticipates that expenses in 2023 will range between $86 billion and $92 billion, which is lower than the previously projected range of $89 billion to $95 billion.
Zuckerberg stated that Meta will eliminate several levels of management, require managers to serve as individual contributors, and assign them less than ten direct reports, which would make the organization "flatter." "We do not anticipate expanding headcount as quickly; it makes more sense to use each manager's ability to the fullest and defragment layers as much as possible," he added.
Meta's decision in November to reduce its workforce by 11,000 was the company's first significant layoff in its 18-year history. As of the end of 2022, the company had 86,482 employees, representing a 20% increase from the previous year.
According to layoffs.fyi, a website that tracks job cuts, the technology sector has laid off almost 290,000 workers since the beginning of 2022, with roughly 40% of those layoffs occurring this year.
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