On Wednesday, Meta started laying off technical staff as part of the latest round of job cuts. This recent round of redundancies was announced back in March and was put into action this week.
Meta announced that it would be introducing phased job cuts in November last year, amid slumping revenues and a sustained fall in the company’s stock price. The social media giant’s CEO Mark Zuckerberg then announced that 2023 would be the “year of efficiency,” as the company made efforts to make its operations leaner.
The layoffs appear to have paid off for Meta, at least as far as their share prices are concerned. Despite plummeting in 2022, Meta’s share prices have bounced back quite considerably this year.
Meta job cuts commence this April
On Wednesday morning, Meta employees working in technical positions, such as user experience, software engineering, and graphics programming took to LinkedIn to share that they had been made redundant.
A spokesperson representing Meta, the parent company of Facebook, later confirmed to CNBC that the job cuts had commenced.
According to one former employee of the company who spoke to CNBC, Meta is also terminating positions in product-facing teams, and there are plans to axe employees in business-facing roles as well.
Gameplay programmers were another group not spared from the layoffs. Gameplay programmers and engineers work on the company’s virtual and augmented reality products.
Why is Meta axing staff?
Meta has made two major announcements concerning job cuts over the past six months. In November, the company’s CEO Mark Zuckerberg confirmed that 11,000 employees would be made redundant.
Then in March, Meta announced a further 10,000 employees would lose their jobs. At the time, Zuckerberg described the difficult decision as a “humbling wake-up call”.
A combination of interconnected factors appears to have led to the decision to terminate staff in significant numbers.
Over the course of one fiscal year, Meta sustained a decline in revenue for three consecutive quarters. This coincided with a decline in the value of Meta shares by about two-thirds.
Economists and business analysts have proposed several reasons for Meta’s woes. The pandemic period, which largely confined people to their homes during national lockdowns created a captive audience for the tech industry. During this time, people were forced to live their social and professional lives online, which provided a boon to the industry. Now, however, consumers are no longer a captive audience and revenue has thus contracted.
As noted by the Financial Times in November last year, “Many investors and even some employees have been critical of what they perceive as Zuckerberg’s over-hiring in an effort to seize the spoils of pandemic trends, including more online communication and shopping.”
In addition, there are the issues of government regulation, advertiser revenue, and a costly bet on virtual reality, which Meta recently shifted away from.
Nevertheless, there are some indicators that Meta’s new strategy might be paying off. The company’s shares bounced back by 81% this year and investors have generally welcomed the cost-cutting approach.
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