Meta layoffs EXPLAINED: Why did Meta fire 13% of its employees? What next for the Facebook parent company?
Meta's mass layoffs
Facebook parent company Meta has let go around 13 per centof its workforce. In a letter to his employees,Zuckerberg explained how he hadhired aggressively during the pandemic and had anticipated quick growtheven after the pandemic ended.The mass layoffs, which are the first in Meta's 18-year existence, came shortly aftermassive jobcuts at Microsoft Corp. and Twitter, now owned by Elon Musk. But, why did Meta fire so many employees in the first place? What are the ramifications of this move for its Indian employees? How does it reflect on the larger structural problems of the company? We explain the same in-depth.
What is Meta exactly doing?
As it struggles with rising costs and plummeting ad revenues, Meta has adopted various cost-cutting strategiesin addition to firing almost 11,000 employees. By extending its freeze on fresh recruitment until the first quarter, the firm intends to reduce discretionary spending. However, it hasn't mentioned the areas that would be affected by the transfers or the estimated cost cuts. Before the firings, Meta had been indirectly hinting at cost-cutting measures by reducing its real estate holdings and doing away with some of the benefits it provided to its employees, such as free laundryand dry cleaning services,dinners they were permitted to packhome to their families and availfree valet services.
Reasons behind downsizing
There aretwo key factors at play.First, during the peak of the COVID-19 pandemic, social media companiesembarked on a recruiting spree.The reason being that more people stayed indoorsduring the pandemic lockdown and spent more time on the internet.
However, once the lockdowns ended and people resumed venturing outdoors, the upward trend faded.“In its earnings report last month, Meta disclosed that Reality Labs, the part of the company working on the metaverse, had $3.67 billion in operating losses. Reality Labs also experienced its lowest revenue since the final quarter of 2020. The company expects the operating losses for Reality Labs to increase next year,”The New York Timesreported.
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The United States' economic slump made everything worse. This past summer, Meta recorded its first-ever quarterly sales decrease, which was followed by a larger decline in the following season.
What next for Meta?
A impendingrecession has Meta and its advertisers on high alert. The difficulty of using Apple's privacy settings, which make it harder for social media sites like Facebook, Instagram, and Snap to monitor users without their permission and target them with adverts, is another issue. As more young people choose TikTok over Instagram, which Meta also owns, competition from TikTok is becoming a greater concern.
More cost cuts at Meta will be rolled out in coming months, Zuckerberg said.However, Zuckerberg has made it clearthat his commitmentto the metaverseis unwavering.
What happens to the Indians who got fired?
Many affected Indians have expressed their concern on social media platforms like Twitter and LinkedIn. These affected Indians are on H1B visas and must find jobs within 60 days of the termination date. Any H1B visa holder who is unable to obtain employment within 60 days will have to return to their country of origin. In this situation, Indians who are jobless after the grace period must goback. The original employer will need to bear the cost oftheir return ticket in accordance with H1B visa policy.
Unlike Musk, Zuckerberg said that he will assist migrant employees with their immigration.
Employees in the United States will get 16 weeks of severance compensation in addition to two"additional weeks for every year of service, with no cap." All remaining Paid time off leave, or PTO (an employee leave policy under which the company sanctions a pool of leaves for its employees) vesting on 15 November,2022, the cost of healthcare for them and their families for six months, and three months of career support from an outside vendor will be provided to laid-off staff.
(With inputs from agencies)
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