Meta to Cut 10,000 Jobs, 5,000 Open Roles in Efficiency Push
(Bloomberg) -- Meta Platforms Inc. plans to lay off around 10,000 employees and close about 5,000 additional open roles in its second major round of job cuts in the past six months.
Most Read from Bloomberg
Credit Suisse’s Fate Was Sealed by Regulators Days Before UBS Deal
Morgan Stanley Strategist Says Bank Stress Signals Bear Market End
US Studies Ways to Guarantee All Bank Deposits If Crisis Expands
The One Big Winner and Many Losers of UBS’s Credit Suisse Rescue
The Facebook parent company has been marketing 2023 as a “year of efficiency” in an effort to improve its financial performance and achieve longer-term goals. As part of those efforts, Meta is flattening the organization, canceling lower priority projects and slowing hiring, Chief Executive Officer Mark Zuckerberg said in a statement on Tuesday. Bloomberg previously reported that cuts were coming. The world’s largest social-networking company in November already laid off 11,000 people, or 13% of its staff.
The Facebook parent company lowered its outlook for 2023 expenses to $86 billion to $92 billion, accounting for the job reductions and other cost-cutting measures. That’s down from $89 billion to $95 billion previously, according to a company filing, and includes about $3 billion to $5 billion in restructuring costs including severance.
Meta employees had been bracing for more layoffs in recent weeks. Zuckerberg has been outspoken about the need to better prioritize projects and investments and has hinted at additional job cuts. Meta began its flattening process earlier this year, eliminating some middle managers and asking others to return to individual contributor roles instead of overseeing other employees.
Even so, Zuckerberg said “this update may still feel surprising.” Shares gained 7.3% to $194.02 at the close in New York, the highest price in more than eight months.
The company expects to announce restructurings and layoffs in tech groups in late April, and business groups in late May, according to the statement. With less hiring overall, Zuckerberg said he’s also reducing the size of the recruiting team.
The company, which also owns Instagram and WhatsApp, has seen a slowdown in advertising revenue, leading to its first-ever annual sales decline in 2022. Zuckerberg has shifted Meta’s focus and investment in the past year to virtual reality technology and the so-called metaverse, which he envisions as the next major computing platform.
Meta’s employee ranks expanded dramatically during the Covid-19 pandemic as demand for the company’s digital services increased and Zuckerberg leaned into the moment. The social media giant’s headcount grew 30% in 2020, the first year of the pandemic, and then 23% in 2021. By the time Meta starting eliminating jobs last November, the company had more than 87,000 employees.
As part of its efficiency plan, Meta is focusing on returning to a “more optimal ratio of engineers to other roles,” Zuckerberg said. The company will invest in tools, such as those in artificial intelligence, to help engineers write code faster, to make it “most effective over many years, not just this year.”
To flatten the organization, Meta will remove multiple layers of management and will ask many managers to be contributors too. In general, the company doesn’t want its managers to have more than 10 direct reports, but today many have only a few, Zuckerberg said.
Meta’s $3 billion operating-expense reduction for 2023 “is likely aimed at aligning expenses to top-line growth,” write Bloomberg Intelligence’s Mandeep Singh and Damian Reimertz. “We believe a major focus of this second round of layoffs will be in R&D.”
During the pandemic, Facebook was one of the first tech companies to offer all of its employees the ability to work from home. But Zuckerberg is now encouraging his staff to “find more opportunities to work with your colleagues in person.” Other tech companies including Twitter Inc., Apple Inc., and Amazon.com Inc. have also begun calling employees back to the office at least a few days a week, walking back earlier policies that were more lenient.
As the Menlo Park, California-based company pares staff, workers have described heightened anxiety and low morale among colleagues. But Zuckerberg’s focus on efficiency has been well received by Wall Street. Meta stock has gained nearly 58% since the beginning of the year.
Zuckerberg said that most companies would scale back their long-term vision and investments in the face of this new economic reality, but “Meta has the opportunity to be bolder and make decisions that other companies can’t,” he said. “So we put together a financial plan that enables us to invest heavily in the future while also delivering sustainable results as long as we run every team more efficiently. The changes we’re making will enable us to meet this financial plan.”
(Updates with closing share price in the fifth paragraph. The third paragraph of an earlier version of this story was corrected to show the expense number range is in billions, not millions.)
Most Read from Bloomberg Businessweek
ChatGPT Advances Are Moving So Fast Regulators Can’t Keep Up
Pumping Heat a Mile Underground Is Helping One City Cut Carbon
©2023 Bloomberg L.P.
