The job cuts at Meta suggest that companies rely on recurring layoffs

• The recent layoffs at Meta are a sign that some employers are willing to make recurring cuts.
• This is a departure from the “big cuts” mentality.
• A talent consultant argued that continued layoffs hurt morale and were not a sound long-term strategy.

The hashtag on Andy Welfle's LinkedIn photo says it all: #sickofthisshit.

Welfle wrote earlier this month that he was fired from Microsoft after just nine months. He previously spent nine months with Cruise before being fired.

His double layoffs may have been worse than what many others have experienced, but Welfle isn't the only one affected by some employers' apparent penchant for regular layoffs, particularly in Silicon Valley.

One of the most recent examples is Meta, which announced on Wednesday that it was restructuring some of its largest companies, resulting in job losses at Instagram, Reality Labs and WhatsApp.

It was not clear how many roles were canceled. A Meta spokesperson told Business Insider on Wednesday that the company is looking for other positions for the affected workers.

After losing workers through widespread layoffs in late 2022 and early 2023, many tech companies are taking a more methodical and departmental approach to cuts. Major companies like Google, Amazon and Microsoft have announced significant cuts, followed by smaller cuts.

Take Google. The tech giant's parent company, Alphabet, began 2023 by cutting around 12,000 jobs, or about 6% of its workforce. This led to smaller reductions this year.

Art Zeile, the CEO of tech careers marketplace Dice, told BI that some of the industry's largest companies have found that certain departments are no longer sufficiently profitable and that they need to redirect resources to growth areas such as artificial intelligence.

“It’s a shifting of bets,” he said, adding that these routine job cuts here and there are the new normal — for now.

Not surprisingly, despite growth in some areas, the torrential cuts in recent years seem to be making some tech people nervous. In a June survey by Indeed of more than 1,100 U.S. technology workers, 40% of respondents said they expected to be affected by layoffs at their company. Seven in 10 said they would look for other employers if their company laid off workers.

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A costly decision

Linsey Fagan, senior talent strategy advisor at Indeed, told BI that most of the recurring layoffs were in the technology sector. That's likely because many companies in the industry grew quickly during the pandemic and are still adapting.

But these recurring cuts are not without costs, Fagan said.

“It’s definitely not a sustainable strategy,” she added.

Fagan said employee morale is beginning to dip ahead of a layoff as workers suspect impending cuts. After layoffs, workers' feelings toward the company — and a CEO's acumen — “decrease in the long term,” she said.

“If you look at a company that's trying to get out of this situation – if they're constantly doing layoffs, it just can't happen,” Fagan said.

Even small layoffs can make workers nervous, she said. Fagan added that the rise of technologies like generative AI and the threat of layoffs are pushing many tech workers to expand their skills.

She said tech people looking for jobs on Indeed are now more likely to apply to staffing firms that may offer temporary positions, or for jobs in fields like healthcare, than to tech firms.

Fagan said that while some technicians are attracted to the flexibility that temporary or part-time positions can offer, technology has historically been the No. 1 industry in which technicians want to work.

“They just don’t feel that stability right now,” Fagan said.

Why they do it

Some companies' penchant for regular nips and tucks may be because Wall Street celebrates this type of trimming.

At Meta, CEO Mark Zuckerberg was “wonderfully rewarded” by the market for the cuts, Zeile said, pointing to a rise in the company’s stock price.

Beyond what investors may be cheering, the tech giants are aging and no longer in growth mode, when their goal was often to grab workers. As a result, many companies have cut back due to the rush of hiring during the pandemic.

Since then, some bosses have tried to downsize their organization and make improvements in other ways. Zuckerberg famously declared that 2023 would be the company's “Year of Efficiency.” He also said the policy would become a feature, not a bug.

It's not all bad news for tech jobs

Zeile predicted that investors would ultimately expect technology companies to do more than just increase profits by cutting costs and that they would see a return to growth. He said hiring would increase across the board as companies realized they needed workers in many areas.

A company like Meta may be making savings in some areas, but growing elsewhere, Zeile said.

“Meta is actually in tears right now,” he said. “They just don’t hire VR engineers anymore. They’re hiring AI engineers, so they’ve actually increased their hiring.”

Fagan said one sign that the tech industry may be nearing stabilization is that job postings in areas such as software development have remained flat in recent months after several years of decline, although they are still 30% below 2020 levels lay. Of course, this means there are fewer options for laid-off workers. Still, she said, it's an indication that companies are careful not to hire too many people.

“It’s not like they go out and hire massively and then lay them off,” Fagan said.

Welfle, who was fired from Microsoft, wrote on LinkedIn that he was looking for a job as a content designer, perhaps at a smaller company. He also said some of his feelings were similar to those he experienced after his release in December.

“I find it difficult to separate my sense of values ​​and self-worth from my identity as a corporate employee,” he said. “But I will definitely think about it and find gentler, more sustainable ways to live in a capitalist society.”

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