First Twitter, then Microsoft Corporation and now Meta. Facebook's parent Meta is laying off 11,000 people, about 13 percent of its workforce, as it contends with faltering revenue and broader tech industry woes, CEO Mark Zuckerberg said in a letter to employees Wednesday, November 9, as per AP.
Why are tech companies mass laying off their employees? Are the employees getting any compensation for the same?
What happened with Meta?
Zuckerberg said that he had made the decision to hire aggressively, anticipating rapid growth even after the pandemic ended, as per a report by AP. “Unfortunately, this did not play out the way I expected,” Zuckerberg said in a prepared statement, as per AP. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition and ads signal loss have caused their revenue to be much lower than what they had earlier expected, the report said. As a result, Meta has resorted to cost-cutting measures such as layoffs and freezing its hiring process through the first quarter, according to reports. Before these layoffs, reports also point out that Meta was withdrawing perks given to its employees such as free laundry and dry cleaning services.
Is it the same story with other major tech companies?
The job cuts come just a week after widespread layoffs at Twitter under its new owner, Elon Musk. The company laid off around 3,700 people on Friday, November 4 via an email to around half of the Twitter global workforce stating that they were being made redundant or that their jobs were at risk, as per AP. The billionaire defended the firings as “an effort to place Twitter on a healthy path” and it was, unfortunately, necessary to ensure the company's success moving forward, according to reports. The mass layoffs have been globally scrutinised by employees who had a huge role in building the platform. Some employees also alleged that they weren’t given the required 60-day advance notice before firing them, which is illegal.
Other tech companies like Microsoft, have also laid off around 1,000 employees across many of their levels and teams to evaluate their “business priorities” and make “structural adjustments”, according to reports. Snap, the company that runs the social media platform Snapchat also cut off around 20 per cent of its workforce in August this year as its stock price fell over 80 per cent in the last year. Intel too is planning to let go of thousands of its employees soon to cut costs, according to reports.
Why are all these layoffs happening simultaneously?
While each company cited their own reasons for the layoffs, the common thread that connects them all is cost cutting owing to recession. Many of these companies saw a boost during the pandemic but later observed a decline post the lockdown years. Meta, like other social media companies, enjoyed a financial gain period during the pandemic lockdown era because more people stayed home and scrolled on their phones and computers, as per AP.
But as the lockdowns ended and people started going outside again, revenue growth began to falter. An economic slowdown and a grim outlook for online advertising have contributed to Meta's woes. This summer, Meta posted its first quarterly revenue decline in history, followed by another, bigger decline in the fall, as per AP.
Additionally, the new challenge of Apple's privacy tools has made it more difficult for social media platforms like Facebook, Instagram and Snap to track people without their consent and target ads to them, as per AP. Competition from TikTok is also a growing threat as younger people flock to the video-sharing app over Instagram, which Meta also owns, the report also said.
Is any compensation being provided to the employees?
CEO Mark Zuckerberg acknowledged that employees on work visas such as H-1Bs are now faced with uncertainty over their immigration status and offered support to them in the form of dedicated immigration specialists to help guide them based on what they and their family need, according to reports. H-1B visa holders can usually stay and work in the US for a period of three years, extended by another three years. If they lose their jobs, they only have a "grace period" of 60 days to find an employee willing to sponsor their H-1B, failing which, they will be required to leave the US.
However, netizens took to Twitter to call out the manner in which these layoffs took place and the consequences it has for the employees. “Twitter layoffs. TMobile layoffs. Now 11,000 Meta layoffs. And because this is the US, all of those people lose their health insurance along with their salaries. The American health system is designed to keep you beholden to your corporate overlords. It is serfdom,” said author Zack Davisson on Twitter.
Additionally, others also stated that this highlights the growing need to extend the “grace period” of stay in the country after employees are laid off by their companies. “Tech layoffs are a reminder that the US H1B system badly needs reform. Employees who helped build widely used and valued products deserve better than to scramble for a job or need to leave. Grace periods should be extended and the time to green cards should be much faster,” Andrew Caroll, who works at Google Health, said in a post on Twitter.
