Sections of this topic
In this article, we’ll look at the reasons behind the recent wave of job cuts in the tech industry, with Meta and Twitter wielding the axe more brutally than their competitors.
Key Takeaways:
- Twitter has laid off 80% of its employees, the highest rate in the tech industry.
- Meta, with cuts amounting to almost a quarter of its workforce, follows closely behind.
- Over-hiring during the pandemic and subsequent decline in revenue per employee contribute to the layoffs.
- According to tech investor Keith Rabois, many Meta and Google employees may have been doing “fake work” after the companies went on a hiring spree during the pandemic.
The Layoff Landscape: Meta and Twitter Outpace Competitors
The tech industry is no stranger to change, but the recent trend of massive layoffs has many wondering what’s in store for the future.
As it stands, Meta and Twitter have led the charge, cutting more employees than other tech giants like Google and Microsoft.
Twitter’s decision to let go of a staggering 80% of its workforce, or roughly 6,300 employees, has raised eyebrows.
This move came after billionaire Elon Musk took control of the company in October. It’s a clear indication that the social media platform is undergoing a significant transformation.
Meta, formerly known as Facebook, has also been in the spotlight with its ruthless job-cutting strategy.
According to an Insider analysis, the company has laid off nearly a quarter of its workforce, which was around 87,000 employees in 2022. CEO Mark Zuckerberg announced a cut of 11,000 jobs in November, followed by another 10,000 in March.
This week, Meta began its third round of job cuts, rumored to be in the thousands.
This newest round has primarily affected management roles, including technical product managers across Reality Labs, Facebook, and Instagram.
Mark Zuckerberg’s Admission: Over-hiring During the Pandemic
In a memo to staff, Meta CEO Mark Zuckerberg admitted to over-hiring during the pandemic.
With people spending more time online, he made the decision to ramp up investments, expecting a boom in online activity.
However, things didn’t pan out the way he had anticipated.
Zuckerberg’s admission sheds light on a common issue in the tech industry: the drive to expand rapidly at the cost of efficiency.
Many tech companies have bloated workforces, with employees taking on multiple roles, often leading to redundancy and inefficiency.
Meta is shifting its focus to improve its efficiency according to Zuckerberg’s plan for a “year of efficiency.”
He stated in February that due to the current situation, it is crucial to concentrate more on efficiency to ensure effective work.
Amazon’s Corporate Workforce Trims: Excluding Warehouse Workers
Amazon, which is another large technology company, has recently reduced its number of employees.
They stated in January that they would dismiss 11,000 people, and then announced another 9,000 job cuts in March.
These reductions make up 7% of their total number of employees, which was 380,000 in 2022.
It’s important to note that these figures don’t include Amazon’s warehouse workers, who have been subject to separate layoffs and controversies.
While not as brutal as Meta or Twitter, Amazon’s job cuts highlight the pressure on tech giants to streamline their operations, increase efficiency, and focus on long-term growth.
Keith Rabois’ Insights: Revenue Per Employee and “Fake Work”
Keith Rabois, a well-known tech investor and member of PayPal’s founding team, has expressed concerns about companies in the tech industry hiring too many employees.
He has stated that during the pandemic, Meta and Google hired excessively, resulting in thousands of workers performing what he calls “fake work.”
Additionally, Rabois has said that it’s not surprising that these big companies are now laying off employees since they over-hired in the first place.
To support his argument, Rabois referred to the metric of revenue per employee as an effective way to measure a company’s bloat.
A recent Insider analysis found that revenue per employee dropped at many major tech firms now cutting jobs.
For example, Between 2018 and 2022, the number of employees working for Meta increased by 143%, but the revenue earned per employee decreased by 14%.
Zuckerberg seemed to agree with Rabois’ sentiments, emphasizing Meta’s commitment to efficiency in 2023.
Conclusion
The ongoing trend of massive layoffs in the tech industry, led by Meta and Twitter, has cast a spotlight on the consequences of over-hiring during the pandemic.
With the initial assumption that increased online activity would require larger workforces, tech companies have since discovered the need for greater efficiency and streamlined operations.
As more tech giants like Amazon join the fray in trimming their workforces, it’s clear that the industry is entering a new phase of self-reflection and evaluation.
The focus is now shifting toward long-term growth, efficiency, and effectiveness.
The insights provided by individuals like Keith Rabois, who highlighted the issue of “fake work” and the importance of revenue per employee, have further emphasized the need for change.
As these tech titans adapt to the challenges posed by a post-pandemic world, the industry is likely to see further transformations and adjustments.
