Meta Platforms, the parent company of Facebook, announced 10,000 job cuts on Tuesday, becoming the first Big Tech corporation to announce a second round of massive layoffs as the industry braces for a severe economic slump.
On the news, Meta shares rose 6%. The widely predicted job losses are part of a larger restructuring in which the corporation would abandon hiring plans for 5,000 jobs, eliminate lower-priority projects, and flatten layers of middle management.
“I think we should prepare ourselves for the possibility that this new economic reality will continue for many years,” Chief Executive Mark Zuckerberg said in a message to staff.
Fears of an economic slowdown caused by rising interest rates have prompted a wave of mass layoffs across corporate America, from Wall Street banks like Goldman Sachs and Morgan Stanley to Big Tech companies like Amazon.com and Microsoft.
Meta, which is investing billions of dollars to develop the futuristic metaverse, has battled with a post-pandemic downturn in advertising spending from businesses concerned about the economy.
Zuckerberg: Meta will eliminate numerous layers of management
In return, Zuckerberg has promised to turn 2023 into the “Year of Efficiency”. Meta now estimates spending in 2023 to be between $86 billion and $92 billion, down from the $89 billion to $95 billion previously anticipated.
According to Zuckerberg, Meta will eliminate numerous layers of management, ask managers to become individual contributors, and assign them fewer than ten direct reports, making the organization “flatter.”
“We don’t expect to grow headcount as quickly, it makes more sense to fully utilize each manager’s capacity and defragment layers as much as possible,” he said.
According to the layoff-tracking website layoffs.fyi, the tech industry has cut off almost 290,000 workers since the beginning of 2022, with roughly 40% of them coming this year. Meta’s decision to fire off 11,000 employees in November was the company’s first big layoffs in its 18-year history. Its headcount stood at 86,482 at the end of 2022, up 20% over the previous year.