JOIN USRevenues dip, tech giants cut jobs
Winter is coming and tech giants are bracing themselves for the worst.
Meta, which unveiled plans to layoff 11,000 employees on Wednesday, joined a growing group of tech companies to downsize in recent weeks or freeze hiring, as revenue from digital ads dropped after their clients slashed marketing budgets amid rising global economic uncertainty.
Microsoft and Twitter have cut jobs, while Apple, Amazon and Alphabet have all slowed or paused hiring.
“Miscalculations, like assuming that pandemic-induced behaviours were permanent, can result in layoffs. Layoffs at Meta and Twitter fall into this category,” said T N Hari, an HR expert who is also the co-founder of Artha School of Entrepreneurship.
Facebook parent Meta’s founder, Mark Zuckerberg, admitted as much.
“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected,” he said, as he unveiled plans to lay off about 13 per cent of the staff, and extend the hiring freeze through the first quarter.
“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,” Zuckerberg said.
“In this new environment, we need to become more capital efficient.”
A Meta spokesperson did not respond to DH’s queries on the impact on its operations in India, where it has 300-400 employees. “It’s more of a market correction because of some excessive abuse of hiring in the last one year,” said Achyut Menon, a global hiring expert and managing director at Options Executive Search.
“Employees working on Instagram might be impacted less than those who are working on Meta, as Instagram is a revenue-generating product,” an industry tracker said on condition of anonymity, indicating that Meta’s pivot to the metaverse didn’t work.
Employees who are being laid off will get severance, including 16 weeks of base pay with two additional weeks for every year at the company, all remaining PTO paid and health insurance for employees and their families for six months. They will also get career support for three months, including early access to unpublished job leads and immigration support for employees on visa.
“Tech companies are preparing for a recession. They want to cut down on their costs because they project that the next few years are going to be tough for them,” an ex-Amazon employee told DH on condition of anonymity. “By firing their least-performing employees, and products, they are saving up and investing in high-performing products and employees,” he added.
What about India?
“Outside the US, support will be similar, and we’ll follow up soon with separate processes that take into account local employment laws,” Zuckerberg said.
Last week, Meta’s India head, Ajit Mohan, ended his four-year stint at the social media giant abruptly to become the Asia-Pacific head of rival Snap. Meta faces a host of challenges in India including women abandoning its network due to safety and privacy concerns, nudity content, app design complexity, language barriers and diminishing appeal among people seeking video content.
Facebook’s growth began plateauing last year, when it added a few million users in the space of six months in the country of about 1.4 billion people, lagging sister apps WhatsApp and Instagram, Reuters reported in July, citing Meta’s own research.
It was not immediately clear how Wednesday’s layoffs would affect Meta’s India staff.
“India layoffs is not a very intelligent thing, it makes sense for them to remove people elsewhere,” Menon told DH.
Some others worried about the indirect effects of the layoffs too.
“Definitely, layoffs will have an impact on India operations. The hiring freeze and layoffs will definitely affect the morale of the India team. So, Facebook must continuously motivate its employees,” said Sarbojit Mallick, the co-founder of Instahyre.
The future looks bleak
Some others predicted more tech industry layoffs in the coming months.
“Now, companies are not driven by the value of the company but the valuation of the company and we can expect more such lay-offs in the future,” Menon said.
The industry-wide layoffs could also make some employees think local.
“Working with global corporations where both technical and support function roles in middle and senior managerial positions have increasingly become susceptible to downsizing will lead to job seekers vying for Indian conglomerates in the short term for increased job stability,” Manu Saigal, the director of general staffing at Adecco India, told DH.