The social media tech company Meta, which brings us platforms like Facebook, Instagram, and WhatsApp, made a shocking announcement on Wednesday. Current Meta CEO Mark Zuckerberg sent a message to all employees to inform them that the company will be laying off approximately 13% of its workforce.
This layoff will affect 11 000 employees and marks one of the biggest tech layoffs in 2022. The layoffs will affect the entire family of Meta apps, including Facebook, Instagram, WhatsApp, and Reality Labs.
Mark Zuckerberg explained that he understood this is a difficult situation for all involved and also took accountability for the decision. He continued to explain that the company had made large investments into eCommerce at the start of the pandemic, along with other innovations. This was because he believed the pandemic would cause a rise in eCommerce, which it did, but unfortunately, that trend was not sustained as eCommerce numbers have returned to pre-pandemic levels.
Apart from this, there are also other factors that have placed financial strain on the company. These include the macroeconomic downturn and ads signal loss. All of these contributing factors have dug deep into the company’s revenue leading to the necessity for cost-cutting measures and layoffs.
Along with the layoffs, Meta also explained what other cost-cutting measures they’ll be implementing. These include scaling back budgets, reducing perks, and shrinking the company’s real estate footprint. They’re also implementing a hiring freeze for the first quarter of 2023, with a few minor exceptions. Mark Zuckerberg will be overviewing the entire staffing process to determine when it’ll be the right time to start hiring.
Will laid-off Meta employees receive severance packages?
This is the first time in 18 years that the company has had to lay off employees, and the company is trying to manage the situation to the best of its abilities. Along with the announcement, CEO Mark Zuckerberg also announced that they will be giving severance packages to all employees affected by these layoffs. For US employees, the package will consist of the following:
- Employees will receive 16 weeks of severance pay, along with two weeks extra for each year the employee has been with the company.
- Any remaining paid time off will also be paid out to employees.
- Employees and their families will still receive six months of health insurance.
- Employees will also receive career support services from an external company to assist in finding new jobs.
- There will also be immigration support for any employees currently on visas.
Outside of the US, employees will receive similar severance packages but in accordance with local employment laws. The details of these packages will only be released once the local laws have been checked.
Since the announcement, many employees have had their access to most Meta systems removed. However, access to emails has been kept to give employees a chance to communicate their farewells.
Other tech companies that are feeling the strain
Meta isn’t the only tech company that’s feeling the strain. Just last week, Twitter cut about 50% of its workforce following Elon Musk’s takeover. These layoffs were much more chaotic than the ones at Meta. Many employees only discovered that they’d been laid off after losing access to Slack and emails. After the layoffs, Elon Musk even asked a few employees back.
Google was the first tech giant that started to fear a major recession and announced at the beginning of the year that they’d be limiting new hires. In July, things came to a head when the company announced a hiring freeze. The company even announced that it’s completely stopping its streaming service Google Stadia after just three years on the market. Other tech companies followed the hiring freeze.
Snap Inc, the parent company of Snapchat, is facing similar layoffs. In August of this year, they announced they’ll be cutting back their workforce by 20%. They’ve also halted work on new projects, such as their gaming platform.
Lyft announced in September that they wouldn’t be taking on any new employees in 2022 amidst the economic instability. Lyft will also be cutting its workforce by 13%. Stripe faced similar hardships and announced the layoffs of 14% of its workforce.
In October, Apple announced that they’ll be freezing their hiring process and might only resume hiring employees from September 2023. Amazon has also announced that they won’t be hiring any new staff and might just fill critical positions if someone leaves for a better opportunity. They did not give an estimate of how long the hiring freeze will last.
It seems like the boom experienced by tech companies during the pandemic has worn off, and now these companies are paying for it. Inflation rates that haven’t been seen in decades, rapidly rising interest rates, and high competition on ad campaigns are making it difficult for these companies to sustain their sudden growth spurt.
The ongoing economic turmoil has had a major impact on tech companies. At the moment the future of these businesses is uncertain and we’ll have to wait for more information to see what the future holds.