On Wednesday i.e. 9th November, Meta let off 13% of its workers. More than 11000 employees, including those working for Facebook, WhatsApp, and Instagram, have been let go by CEO Mark Zuckerberg overall. Zuckerberg accepted full responsibility for the Meta layoffs, in contrast to Twitter CEO Elon Musk. “I want to accept responsibility for these choices and how we arrived here. I’m sorry to those affected, and I know this is difficult for everyone, he said.
In addition to severance money, Meta is providing affected staff with immigration support for overseas workers, including Indians. If you’re in the country on a visa, I realise this is very challenging. There are notice and grace periods before termination, as well as some visa grace periods, so everyone will have time to plan and resolve their immigration situation. According to what you and your family require, we have devoted immigration specialists who can help, Zuckerberg wrote in the blog post.
Many of the affected employees have H1B visas, which give them 60 days to find new employment in the US after being let go. The affected employee will have to return to their home country and the original company will be responsible for the flying costs if they are unable to find employment within the allotted time frame.
Many foreign workers, especially many Indians, are looking for work in order to remain in the United States following big layoffs at Meta and Twitter. While Meta has devoted immigration professionals who will assist impacted employees and their family if they do not find a job in the next 60 days, Twitter has not provided any immigration support.
According to the company, US employees would receive 16 weeks of severance compensation as well as two “extra weeks for every year of service, with no cap.” Employees who are impacted will receive all remaining PTO time, vesting on November 15, 2022, healthcare costs for them and their families for six months, and three months of career support from a third party (including early access to unpublished job leads).
The corporation confirmed that affected employees who work abroad will also receive similar help and that country-specific information will be shared through different procedures that take into account regional employment rules. At this time, it is unclear exactly what kind of support the affected Indian employees will receive.
What has Meta done?
As it struggles with rising expenditures and declining ad revenues, Meta has put in place additional cost-cutting initiatives in addition to issuing pink slips. Through the first quarter, the corporation intends to reduce discretionary spending and maintain its hiring ban. However, neither the impacted areas nor the anticipated cost savings from the changes have been mentioned.
Before the firings, Meta had been signalling cost-cutting measures by reducing its real estate holdings and eliminating some employee benefits, including free laundry and dry cleaning services and dinners that employees could bring home to their families.
Why was Meta forced to make cost reductions?
Generally speaking, due to two factors: declining revenue and heavy investment in the Metaverse project.
Tech companies saw a surge during the Covid-19 outbreak as individuals stayed home and increased their time spent online and using their devices. The post-pandemic boom has not been sustained. Additionally, Facebook is under fierce competition from websites like TikTok.
According to Zuckerberg’s letter, “At the beginning of Covid, the world moved quickly online and the boom of e-commerce led to outsized revenue growth. Many individuals predicted that this acceleration would go forever… I decided to dramatically boost our investments because I felt the same way. Sadly, things didn’t turn out the way I had anticipated. Online sales have not only resumed their previous patterns, but our revenue has also fallen far short of what I had anticipated due to the financial slump, increasing competition, and loss of ad signal. I acknowledge that I made a mistake in this.
Investors in Meta have also expressed dissatisfaction with the money flowing to Metaverse. Investors sent Meta’s shares plunging more than 71% since the year’s beginning as it invested more than $10 billion annually in the metaverse, according to AP.
According to the New York Times, “Meta stated that Reality Labs, the division of the firm working on the metaverse, suffered $3.67 billion in operating losses in its quarterly report last month. Additionally, Reality Labs saw its lowest sales since the fourth quarter of 2020. The business anticipates a rise in Reality Labs’ operating losses in the upcoming year.
The United States’ economic slump made everything worse. This past summer, Meta recorded its first-ever quarterly sales decline, which was followed by a larger decline in the following season.
A SERIES OF DOWNS
The company’s market worth was reduced by $80 billion (£69 billion) by investors last month after it said that third-quarter profits had been halved. Since the year’s commencement, it was one of the most shocking devaluations to be witnessed on Wall Street.
The third quarter’s earnings for Meta were yet another set of dismal figures. The greatest single-day loss in US business history, it saw a market value decline of $230 billion in February.
After declaring a recruiting freeze and planned restructuring in September, Meta had made hints about employment losses.
In a recent Q&A session with staff, Zuckerberg said, “I had thought the economy would have more obviously stabilised by now, but from what we’re seeing it doesn’t yet look like it has, so we want to plan more conservatively.”
TREND OF THE DISMAL TECH COMPANY
Big Tech companies recently posted less-than-stellar earnings, but they also provided cautionary signals for the months to come, according to Business Insider. Due to the approaching prospect of a recession and the lack of indications of a recovery, consumers were reducing their expenditure.
According to Dan Wang, an associate professor at Columbia Business School, these businesses will be seeking cost-cutting opportunities everywhere they can during the ensuing weeks and months.
“Labour expenditures and marketing and advertising expenses are frequently the first to go when costs are slashed. It will therefore depend on how they have perceived the trend in advertising expenditure on their platforms when estimating what their numbers would look like. When that doesn’t look good, businesses must change their workforces to meet those objectives, he told Insider.
Murphy had noted that during cycles like these, it frequently occurred that businesses did not make enough layoffs but instead slowed down on hiring in the hopes that regular churn would help them rightsize.
After Q3, which was significantly more challenging than Q2, it became much clearer how many headwinds there were, and entrepreneurs understood they would have to fire workers in order to grow out of this situation.
What does this indicate for the state of the economy?
The once-unstoppable Meta being obliged to implement mass layoffs for the first time ever is a telltale sign of economic problems. Globally, ad revenue for digital platforms has been declining as the first indications of a worldwide recession emerge.
After Apple added App Tracking Transparency to iOS, allowing users to deny developers permission to create a special ID that tracks them and displays adverts based on their behaviour, Meta is worse off. This will reduce the effectiveness of ads on Meta and other platforms. This will cost Meta at least $10 billion this year, according to Meta.
According to Reuters, before the bell on Wednesday, Meta’s shares increased 4.5% to $100.80.
Reuters quoted Hargreaves Lansdown analyst Sophie Lund-Yates as stating, “The market is breathing a sigh of relief that Meta’s management, or Zuckerberg particularly, seems to be heeding some advice, which is you need to take some of the steam out of the expanding expenditure bill.”
It doesn’t quite add up that you’ll try to improve productivity while pursuing something as ambitious and flimsy as the metaverse, she continued.
But Zuckerberg has made it plain that he will keep putting his attention on the metaverse. The AI discovery engine, our ad and business platforms, and our long-term vision for the metaverse are just a few of the high priority growth areas that have received more of our resources, according to his letter.
In his letter, Zuckerberg outlines what Meta intends to do for international and visa-holding discharged employees.
“I am aware that this is particularly challenging if you are visiting on a visa. Everyone will have time to arrange and resolve their immigration situation because of the notice period before termination and some visa grace periods. Depending on what you and your family need, our devoted immigration consultants can help guide you. The letter states that support will be similar outside of the US and that distinct procedures that take into account regional employment regulations will be followed up soon.