Meta will cut 10,000 jobs, reduce 5,000 more vacancies

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(Bloomberg) — In its second major round of job cuts in the past six months, Meta Platforms Inc. plans to lay off approximately 10,000 employees and close approximately 5,000 additional open roles.

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The Facebook parent company is marketing 2023 as the “year of efficiency” in an effort to improve its financial performance and achieve long-term goals. As part of those efforts, Meta is flattening the organization, canceling low-priority projects and slowing hiring, Executive Officer Mark Zuckerberg said in a statement Tuesday. Bloomberg previously reported that cuts were coming. The world’s biggest social-networking company has already laid off 11,000 people or 13% of its workforce in November.

The Facebook parent company slashed its outlook for 2023 expenses from $86 million to $92 billion, accounting for job cuts and other cost-cutting measures. That’s down from an earlier $89 million to $95 billion, according to a company filing, and includes $3 billion to $5 billion in restructuring costs, including divestitures.

Meta workers were bracing for more layoffs in recent weeks. Zuckerberg has been vocal about the need to better prioritize projects and investments and has hinted at additional job cuts. Meta began its flattening process earlier this year, laying off some middle managers and asking others to return to individual contributor roles instead of overseeing other employees.

Nevertheless, Zuckerberg said “this update may still sound surprising.” Shares were up 5% at $190.20 in New York at 10:42 a.m. ET.

According to the statement, the company expects to announce the reorganization technical groups in late April and business groups in late May. Along with less hiring overall, Zuckerberg said he is also reducing the size of the recruiting team.

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The company, which also owns Instagram and WhatsApp, has seen a slowdown in advertising revenue, leading to its first annual sales decline in 2022. Zuckerberg has shifted Meta’s focus and investments over the past year to virtual reality technology and so-called. Metaverse, which it sees 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 surged, and Zuckerberg balked in the nick of time. The social media giant’s workforce grew by 30% in 2020, the first year of the pandemic, and then by 23% in 2021.

As part of its efficiency plan, Zuckerberg said, Meta is focused on returning to a “more optimal ratio of engineers to other roles.” The company will invest in tools such as artificial intelligence to help engineers write code faster, making it “the most effective not just this year, but in many years.”

To flatten the organization, Meta will remove multiple layers of management and also ask multiple managers to become contributors. 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.

During the pandemic, Facebook was one of the first tech companies to allow all its employees to work from home. But Zuckerberg is now encouraging his employees to “find more opportunities to work with their colleagues in person.” Twitter Inc., Apple Inc., and Inc. Other tech companies have also started calling employees back to the office for at least a few days a week, making earlier policies more lenient.

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As the Menlo Park, California-based company furloughs employees, workers describe increased anxiety and low morale among colleagues. But Zuckerberg’s focus on efficiency has been well received by Wall Street. Meta stock is up about 58% since the beginning of the year.

Zuckerberg said most companies will reduce their long-term vision and investments in the face of this new economic reality, but “Meta has an opportunity to be bold and make decisions that other companies may not,” he said. “That’s why we’ve put together a financial plan that enables us to invest heavily in the future while also delivering sustainable results as we run every team more efficiently. The changes we are making will enable us to deliver on this financial plan.”

(Updated with financial implications in third paragraph)

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