Meta and Google 'Push Out Employees'... Layoff Storm in the Era of Tightening Budgets

Aiming for Overall Headcount Reduction through Workforce Reallocation
Sharp Decline in Main Revenue Due to Austerity Impact
"The Prelude to a Harsher Wave of Restructuring"

(Photo by WSJ)

[Asia Economy Reporter Yujin Cho] Big tech companies hit by the Federal Reserve's tightening measures are resorting to 'push-out' style layoffs as part of their restructuring efforts.

On the 21st (local time), The Wall Street Journal (WSJ) reported that Meta and Google are implementing layoffs through organizational restructuring. Citing an internal source familiar with the matter at Meta, WSJ stated that the social media giant Meta, facing growth stagnation and intensified competition, plans to reduce costs by at least 10% over the coming months through staff cuts.

Current and former managerial employees explained that Meta is using departmental reorganization methods to achieve its workforce reduction targets.

The company offers employees targeted by this restructuring the opportunity to be reassigned to other departments, but by limiting the timing and scope, it expects that the workforce redeployment will effectively result in a 'net reduction' in headcount.

WSJ explained that it has been Meta's long-standing practice that employees who fail to find a new role internally within 30 days face termination of their employment contracts.

There are also forecasts that this round of layoffs will be the prelude to a harsher wave of restructuring. Sources said this layoff is just the beginning of a larger reduction plan, and while cost savings will also come from cuts in overhead and consulting budgets, a significant portion will be achieved through layoffs.

Regarding this, Meta spokesperson Tracy Clayton said, "As CEO Mark Zuckerberg stated during the Q&A session with employees in June, the company will need to reallocate resources according to priorities."

According to the WSJ report, at the end of June during a Q&A session with employees, CEO Zuckerberg declared that he would weed out employees who fail to meet the company's aggressive performance goals and instructed to identify and remove low performers.

After Meta's Q2 earnings announcement, the company lowered its guidance by reducing operating expense budgets starting in Q3 during the conference call but had not previously stated plans to reduce headcount by means other than natural attrition.

As of the end of Q2 this year, Meta's total number of employees was 83,553, a 32% increase compared to the same period last year, which has increased Meta's cost burden.

Google is also encouraging layoffs through departmental reassignment as part of its cost-cutting measures.

Last week, Google identified about half of the approximately 100 employees in its internal startup incubator 'Area 120' as candidates for transfer and ordered them to find other jobs within the company within 90 days.

Google provides 60 days for laid-off employees to find new roles within the company, but internal staff said that for Area 120 employees, the time constraint is greater due to frequent project cancellations.

Alphabet's employee count as of the end of Q2 this year was 174,014, a 20.8% increase compared to the same period last year.

Big tech companies rapidly expanded hiring during the COVID-19 pandemic. However, due to government tightening policies and economic downturn, the core revenue source?the online advertising market?has rapidly cooled, causing significant damage.

As a result, Meta's stock price has plummeted 56.6% this year, and its market capitalization has evaporated by $685 billion since its peak in September last year. Google's stock price has also fallen 27.3% over the past year.

Google CEO Sundar Pichai stated in a memo to employees in July that the company aims to improve productivity by 20% and that hiring will slow down this year.

This content was produced with the assistance of AI translation services.