The CEO of Meta, parent company of Facebook, Instagram and WhatsApp, Mark Zuckerberg, has announced the company’s plans to lay off 11,000 employees representing 13 percent of its workforce. Meta would also freeze new hires for the first quarter of 2023.
Driving the news
In an announcement shared to the Meta’s Newsroom, Mark Zuckerberg explained that the company over-relied on the surge in usage brought about by Covid-19. He noted that the enormous investment the company made during the surge has backfired post Covid; with online commerce returning to pre-covid trends, macroeconomic downturn, increased competition, and “ads signal loss has lowered revenue than expected.”
- Zuckerberg also highlighted the need for the company to be more capital efficient. Hence, the shift of resources “onto a smaller number of high priority growth areas — like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse.”
Why it matters
The number of staff to lose their jobs is the highest the company has ever recorded in its existence. It also reveals Meta’s desperation to relieve itself of financial pressure.
The big picture
More investors are losing confidence in Meta due to the increased cost of Meta building virtual reality products that have little application today and its dwindling advertising proceeds.
October’s report shows that Meta recorded a decline in year-on-year revenue for the second consecutive quarter. Meta has also lost over 70 percent of its value in 2022 alone.
- Considering recent economic challenges, Salesforce, Twitter and other companies have shredded its workforce to survive.
Tech businesses are taking drastic conservative measures to keep their businesses afloat as the economic downturn continues to unravel globally. Unfortunately, trimming staff strengths is one measure international tech companies are adopting.
- Some of these companies are reportedly trimming their staff due to the operational cost of running a company, including payment of salaries and cost of an on-site office.
- Skilled African techies present a unique opportunity for these companies as they provide options of remote work and lesser salary expectations for near level experience.