Meta to lay off over 11,000 employees, extends hiring freeze to cut costs and become capital efficient

Meta, the parent company of Facebook, announced on Wednesday, November 9, that it will cut more than 13 per cent of its workforce, or roughly 11,000 employees, in an effort to ‘become a leaner and more efficient company’. The company also announced that all hiring has been frozen until the first quarter of 2023, along with other measures.

In a message to Meta employees, Mark Zuckerberg, founder and CEO, says, “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.”

Optimal use of resources

According to the company, the reductions will affect all departments, and the recruiting team will be disproportionately impacted given that there will be less or no hirings next year. The company’s business teams will be restructured “more substantially.”

The company is shifting resources to a smaller number of high-priority growth areas such as AI discovery engines, ads, business platforms, and, of course, the Metaverse. “We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring our teams to increase efficiency,” Mark added.

Severance and support for employees

Zuckerberg said that the employees will have access to their emails so that they can say goodbye to colleagues, however, they have been cut off from sensitive corporate systems. 

A 16-week severance package will also be offered to US workers who have been cut, along with two weeks for each year spent with the company. Health insurance for six months, three-month career support services, and immigration support are also being offered by the company. The severance packages outside of the US will be determined based on  local employment laws. 

Stalled growth after COVID-19

In a statement, Zuckerberg said that he had anticipated that the surge in e-commerce and web traffic during COVID-19 was the beginning of a permanent acceleration that would continue even after the pandemic ended. 

“But the macroeconomic downturn, increased competition, and ad signal loss have caused our revenue to be much lower than expected. I got this wrong,” Mark added.

To adapt to a changing market, Zuckerberg warned Meta employees in late September that it would reduce expenses and restructure its teams. As a result of the hiring freeze and now the layoffs, Meta, which also owns Instagram and WhatsApp, expects its headcount to be lower in 2023 than it is today.