Mark Zuckerberg reveals why companies are laying off workers

Meta boss Mark Zuckerberg has said that layoff spree in the tech sector is a consequence of overhiring during pandemic and companies' realising the importance of being a lean affair.

Zuckerberg contended that despite the discomfort associated with layoffs, firms are increasingly acknowledging the efficiencies and benefits of being "leaner," reported Business Insider.

During an interview with Morning Brew Daily's podcast released on Friday, the Meta CEO shared insights into companies' ongoing adaptation to the post-pandemic landscape. Additionally, he delved into a plethora of other topics.

Amid the pandemic, online shopping boomed, leading to significant boosts in online advertising. However, as people resumed in-store shopping and the economy stabilized, online sales growth slowed, and advertising costs decreased. Many companies, like Meta, found they had hired too many employees and needed to make significant cuts.

Zuckerberg said that companies are now recognising the advantages of operating with leaner teams rather than simply reducing employee numbers due to overhiring. Despite initial reluctance among many tech firms to downsize, they realized it wasn't catastrophic, he noted.

"In terms of the layoffs and stuff like that, I actually think that was more due to companies trying to navigate Covid," Zuckerberg said in the interview when asked if tech layoffs had to do with the AI boom.

"It was obviously really tough, we parted with a lot of talented people we cared about," Zuckerberg said in the interview, reflecting on Meta's past layoffs. "But in some ways actually becoming leaner kind of makes the company more effective."

Since Meta initiated major staff reductions, beginning with Zuckerberg's "year of efficiency," the company has rebounded significantly, reaching an all-time high in stock value.

As part of this efficiency drive, Zuckerberg has been streamlining management layers. Instagram is eliminating technical program managers, and this role is also being scaled back across other parts of Meta.

"Today, companies are still in the mode of thinking about efficiency… Many are considering restructuring the company, flattening out management levels, and transitioning to a leaner model," said Zuckerberg.

Despite strong earnings, companies like Microsoft and Google have continued downsizing. Several CEOs, including those at Amazon, have discussed plans to restructure and invest in AI-driven areas. However, Zuckerberg downplayed the significance of AI in this process.

"At least for us, the AI stuff was not a major driver for that," Zuckerberg said. "It was like first this overbuilding and then this sense of like let's do the best work we can by making a lean company."