Meta layoffs: Could 2025 bring another wave of cuts in technology jobs?

Industry’s big names suggest small percentages of their staff could be retrenched, but analysts are assessing possibility of job losses on scale of 2023 cull

Meta Platforms says it wants to 'move out low performers faster'. Reuters

Meta Platforms plans to lay off 5 per cent of its employees in an effort to attract the best talent, according to a memo reportedly sent by its chief executive this week.

The parent company of Facebook, Instagram and WhatsApp will cut a fraction of its 72,000-strong global workforce based on performance, media outlets cited the memo as saying.

Meanwhile, Microsoft, the world's largest software maker, has also reportedly said it plans to cut a "small percentage" of its workforce for similar reasons.

Both companies are trying to sell the decisions as efforts to support their growth plans, especially with advances in technology. However, for some, the job cuts invite a parallel to a worldwide cull in the technology sector two years ago.

"The factors influencing tech companies to cut jobs stem from a mix of economic pressures, strategic realignments, and the growing impact of AI," Milad Azar, a market analyst at broker XTB Mena, told The National.

"Economic factors, such as elevated interest rates and concerns about economic growth are prompting firms to adopt cost-efficient growth strategies, leading to significant layoffs."

Is it 2023 all over again?

Tech companies carried out a series of large-scale retrenchments in 2023. The trend begin in November 2022, when Meta and Amazon announced job cuts.

Meta initially laid off about 11,000 staff, or 13 per cent of its global workforce, followed by another round of 10,000 cuts in the second quarter of 2023. Amazon, the world's biggest e-commerce company, started at the same time, culminating in the culling of 9,000 roles in March that year.

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Microsoft let go of more employees in the third quarter of 2023, having earlier eliminated 10,000. Google's parent Alphabet fired 12,000 people during the early months of that year, while Yahoo, Spotify and eBay also cut jobs in the thousands.

By August 2023, a total of 342,671 layoffs were recorded in the tech industry, well above the 243,075 lost for all of 2022, data from Jefferies and TrueUp showed.

Cutting costs or changing priorities?

In Mr Zuckerberg's memo this week, he mentioned that he wanted to "raise the bar and move out low performers faster".

Meta is positioning artificial intelligence at the centre of its strategy, and this year is expected to be "intense", according to Mr Zuckerberg.

"Meta is working on building some of the most important technologies in the world – Al, glasses as the next computing platform, and the future of social media," he said in the memo. Hence, he wanted to "make sure" the company has the "best people" on its roster.

In previous job culls, tech companies have attributed the decisions to varying factors, with Amazon, Microsoft and Spotify blaming them on a challenging economy. Alphabet's decision was due to a review of its product areas and functions, while Yahoo cited restructuring of certain units.

The AI question

AI is poised to replace jobs, but also create new jobs, analysts say. Jobs that require human interaction, creativity, critical thinking, strategic decision-making, emotional intelligence and advanced technical expertise are best positioned to thrive amid the AI boom, according to recruitment consultants.

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Jobs in cyber security, business intelligence, big data analytics, AI development, management consulting and software engineering are in high demand, according to data from Dubai-based tech recruitment agency AIQU.

Generative AI, in particular, is an opportunity for companies to create jobs, as it continues to reshape industries and tasks across sectors, the World Economic Forum said in its recent Future of Jobs Report.

However, tech advancements are "converging with a broader array of challenges, including economic volatility, geoeconomic realignments, environmental challenges and evolving societal expectations", Saadia Zahidi, a managing director at WEF, wrote in the report.

Technology-related roles are the fastest growing jobs in percentage terms, including big data specialists, FinTech engineers, AI and machine learning specialists, and software and application developers, WEF data shows.

The waves of layoffs that have prevailed in many sectors, most notably technology, do not only come amid the possibilities of increasing efficiency using AI, but also come with uncertainty about the future of the economy, said Samer Hasn, a senior market analyst at XS.com.

"If companies do not show sufficient flexibility to adapt to the tight monetary environment, which markets are pricing in until the end of the first half of this year, it is not unlikely that we will witness a renewal of layoff waves," he told The National.

Will other companies follow suit?

That remains to be seen. When big and influential companies make job cuts, there is the possibility of a domino effect, similar to what happened in 2022 and 2023. The good news is that there have so far been no announcements from other big tech players about any layoff plans at present.

Also, Meta itself has not hit the brakes when it comes to hiring. As of Wednesday, it had a listing of nearly 2,000 jobs on its career opportunities page.

"It is unlikely we will see a repeat of the mass layoffs from 2023, though some job cuts may continue throughout this year as tech companies adjust," Mr Azar said.

"While economic growth may slow, a full recession is not expected. The tech industry tends to cycle between growth and contraction, and with recovery driven by economic stability and advancements such as AI, layoffs could lessen later in the year if conditions improve."