Tech giant job cuts – harbingers of economic doom or outliers? I’ll wager the latter

Is there a second wave of tech job cuts around the corner? Or is current speculation around new redundancies at Meta merely an outlier, reflecting more specific business issues that it alone has?

Last week, the Central Bank put the number of multinational tech job losses in Ireland so far at around 2,300, which remains well within what the industry said it was short of before it began to tighten its belt.

Since late January, there have been few major announcements of any further job cuts by the bigger firms operating here.

Last week wasn’t a great one in Ireland for the parent company of Facebook, Instagram and Whatsapp, though.

While reports emerged that Meta would imminently announce a fresh round of cuts, its popular head of operations in Ireland, Rick Kelley, announced he was leaving.

He had only taken over 11 months previously. In a post, he said that when he thought about his career options over Christmas, he was “most excited by the prospect of taking a break”.

Ouch.

Kelley will follow at least 350 of the tech giant’s 3,000 Irish staff out the door, after last November’s round of cuts.

There could well be more. Even though Kelley’s primary role within Meta was more as its global VP for gaming, and not head of the Ireland operation – making a back-of-the-envelope conclusion that he’s getting away from a sinking ship in Dublin problematic – the signs are still grim ones for Meta.

Mark Zuckerberg has called 2023 the company’s “year of efficiency”. He has also given fair notice of “ruthless prioritisation” as a new guiding credo. This is almost certain to see some further existing staff leave.

Meta says that it wants to “flatten” its organisational structure, getting managers (and some directors) to become “individual contributors” like the people they currently manage.

It sounds a little like a demotion, although people I’ve spoken to internally insist it isn’t; they say that it’s simply a way of re-organising to a structure that better fits the working cultures of what Meta is trying to build.

Whatever the seniority shift, everyone agrees it will probably leave some without a role.

There is also a more general question of whether Meta is still top-heavy after the extraordinary hiring spree of the last three years.

It has been widely reported that Meta has just delivered a wave of poor performance reviews to some staff – up to twice as many as usual. That doesn’t bode well in an era where the boss says its new HR motto is to be “ruthless”.

And then there is the much-ballyhooed Metaverse, which has still to make any significantly positive impact on the company’s fortunes. Zuckerberg had staked his company’s future on the Metaverse, with billions poured into creating a new mass-market virtual reality platform.

Even though there are some signs of VR taking root in industries such as automobiles and fashion design, it hasn’t been enough to date. Meta appears to be currently downgrading the Metaverse as a priority to focus on artificial intelligence applications instead.

That could mean a readjustment in associated programmes for staff working on related fields.

Finally, there’s the plain old advertising income streams, which have been under pressure since Meta was kneecapped by Apple two years ago.

Tim Cook’s hostility to online data-sucking platforms saw the iPhone introduce a ‘do not track’ user control that disproportionately affected the revenue (over €10bn per year) of Facebook and Instagram.

But even if Meta is staring tougher times in the face, is it a bellwether for the wider tech industry, and for Irish jobs?

Given the proximity to the last round of cuts, it may still be too early to tell.

Other than Meta, only Microsoft has been associated with any follow-on cuts here, and a small number at that.

In this column last November, I guessed that if two of Apple, Google and TikTok cut jobs in Ireland, we’d know we were in for something much deeper than the somewhat ‘corrective’ measures of 5pc to 15pc that came after the biggest hiring sprees in Irish industrial history.

Google has dipped its toe into those job-cutting waters, targeting 240 redundancies, which is a little bit less than 5pc of its workforce here.

But there has been little or nothing, so far, from either Apple (6,000 workers in Cork) or TikTok (3,000 workers in Dublin; TikTok’s single-digit figure reduction in recruitment in Ireland doesn’t count for the purposes and the context of this discussion).

I still think this is a reasonable indication of whether global economic factors are really set to haul the biggest tech sector players back in a significant way, or it’s just specific to the firms – such as Meta and Twitter – whose CEOs find their companies in trouble for slightly more particular, localised reasons.