Layoffs, job loss, security, dismissal and RIF (downsizing) are some of the trending hashtags on social media platforms. Over the past two months, several internet companies such as Microsoft, Snap, Stripe and many more have announced layoffs. The layoffs at Twitter are the most recent, and more may be on the way.
Reports suggest that Meta plans to distribute pink slips to employees at all levels. The announcement is expected anytime this week. Sources reveal that teams such as social impact, partnerships, communications and programs may be affected. Internet companies that are not yet laying off employees are considering hiring freezes.
The macroeconomic situation and the possibility of a global economic recession are not the only reasons behind the layoffs and hiring freezes.
“Can we continue to run the business with fewer people is a question companies are asking,” says Adhvith Dhuddu, CEO of digital marketing and creative technology agency AliveNow.
Unfortunately, in most cases the answer is yes.
Most companies that cut jobs were overly inflated, says Rituparna Chakraborty, co-founder and executive director of TeamLease Services, an HR services company.
“Choices about profitability should always be about sustainability and return on investment (ROI). Chasing rapid growth or grabbing eyeballs by hiring a number of people is not sustainable. Balance is very important in the scheme of things,” Chakraborty said.
Meta, for example, had a few slow quarters. Results for the third quarter of 2022 indicate total costs and expenses reaching $22.05 billion. A 19% increase year over year (YoY). Revenue for the quarter was $27.71 billion, down 4% year-over-year.
Other companies have also seen their numbers drop. Snap posted a net loss of $360 million in the third quarter of 2022. Twitter posted a net loss of $270 million in the second quarter.
Many businesses are considering cutting back on non-essential expenses, Dhuddu says. “Areas such as advertising are among the first to be affected when companies go into cost-cutting mode. This negatively impacts platforms like Meta, Snap and Google, which are also forced to cut costs to offset the loss of ad revenue,” he says.
Meta’s quarterly results for the second and third quarters showed weak advertising demand. In the second quarter of 2022, ad impressions served on its app family increased 15% year-on-year, while average price per ad decreased 14% year-on-year. In the third quarter, ad impressions increased 17% year-on-year and the average price per ad decreased 18% year-on-year.
There’s no hiring on the horizon for these companies unless we see the first sprouts of recovery, experts say.
The chaos following the layoffs was exacerbated by Twitter recalling the employees who were laid off. The situation is even worse at Twitter India, where almost 90% of employees have been laid off. Indeed, there are rumors that the Indian office could be completely closed.