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Meta Platforms Inc. plans to lay off about 10,000 employees and close an additional 5,000 jobs in its second major round of layoffs in the past six months. Facebook's parent company has touted 2023 as a "year of efficiency" in an effort to improve financial performance and meet longer-term goals. As part of those efforts, Meta is flattening the organization, canceling lower-priority projects and slowing down hiring, Chief Executive Officer Mark Zuckerberg said in a statement Tuesday. Bloomberg previously reported that cuts were looming. In November, the world's largest social media company already laid off 11,000 people, or 13% of its staff. Facebook's parent company lowered its 2023 spending forecast from $86 billion to $92 billion, taking into account job cuts and other cost-cutting measures. That amount rose from $89 million to $95 billion previously, according to a company filing, and includes about $3 billion to $5 billion in restructuring costs, including severance.
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Meta employees had braced for more layoffs in recent weeks. Zuckerberg was candid about the need to better prioritize projects and investments and hinted at additional job cuts. Meta began its flattening process earlier this year, removing some middle managers and ordering others to return to individual contributor roles rather than oversee other employees.
Even so, Zuckerberg said that "this update may still come as a surprise." Shares were up 5% at $190.20 at 10:42 a.m. in New York.
The company plans to announce restructuring and layoffs at technology groups at the end of April and at business groups at the end of May, according to the statement. With fewer hiring overall, Zuckerberg said he was also reducing the size of the hiring team.
The company, which also owns Instagram and WhatsApp, experienced a slowdown in ad revenue, leading to its first annual sales decline in 2022. Zuckerberg shifted focus and investment from Meta over the past year to the technology of virtual reality and the so-called metaverse, which he envisions as the next great computing platform.
The ranks of Meta employees have expanded dramatically during the Covid-19 pandemic as demand for the company's digital services grew and Zuckerberg leaned on the moment. The social media giant's workforce grew 30% in 2020, the first year of the pandemic, and then 23% in 2021. When Meta began cutting jobs last November, the company had more than 87,000 employees.
As part of its efficiency plan, Meta is focused on getting back to a "more optimal ratio of engineers to other roles," Zuckerberg said. The company will invest in tools, such as artificial intelligence, to help engineers write code faster, so it will be "more efficient for years to come, not just this year."
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To flatten the organization, Meta will remove multiple layers of management and require many managers to also be contributors. The company typically doesn't want its managers to have more than 10 direct reports, but today many only have a few, Zuckerberg said.
During the pandemic, Facebook was one of the first tech companies to offer all its employees the option to work from home. But Zuckerberg now encourages his staff to "find more opportunities to work with colleagues in person." Other tech companies, including Twitter Inc., Apple Inc. and Amazon.com Inc., have also started calling employees into the office at least a few days a week, reversing earlier, more lenient policies.
As the Menlo Park, California-based company cut staff, workers described increased anxiety and low morale among co-workers. But Zuckerberg's focus on efficiency has been welcomed by Wall Street. Meta shares have gained nearly 58% since the start of the year.
Zuckerberg said that most companies would reduce their vision and long-term investments in the face of this new economic reality, but "Meta has an opportunity to be bolder and make decisions that other companies cannot," he said. “That is why we have developed a financial plan that allows us to invest heavily in the future while delivering sustainable results as long as we manage each team more effectively. The changes we are making will allow us to stick to this financial plan.
