Meta is preparing for its largest-ever round of layoffs, which could affect approximately 20% of its nearly 79,000 employees, translating to around 15,800 jobs. This decision comes as the company commits $600 billion to bolster its AI infrastructure, necessitating a reduction in headcount to finance these initiatives.

Employees in the wearables and ads divisions have been directed to work remotely as layoffs are anticipated soon. This move follows previous rounds of layoffs, where Meta cut 11,000 jobs in November 2022 and another 10,000 in the spring of 2023. Additionally, the Reality Labs division has already seen cuts impacting more than 1,000 roles earlier this year.

Meta’s senior leadership has reportedly asked managers to plan for cuts of 20% or more, although no specific date or final headcount has been established. Analysts suggest that the cuts could extend beyond 20% if AI tools prove as productive as the company anticipates. Barton Crockett, an analyst at Rosenblatt Securities, noted, “The cuts need not stop at 20% if AI tools prove as productive as the company anticipates.”

As part of its restructuring efforts, Meta is introducing a new stock option incentive program for top executives, indicating a shift in focus towards long-term success in the AI sector. The rationale behind these layoffs is tied to Meta’s strategy of converting labor costs into compute capacity, allowing the company to operate effectively with a smaller team.

Following the announcement of the layoffs, Meta’s shares rose nearly 3%, suggesting that investors are focused on margin improvement and the company’s commitment to AI. A spokesperson remarked, “This is a big bet. These pay packages will not be realized unless Meta achieves massive future success, benefiting all of our shareholders.”

What observers say

Meta has committed to AI infrastructure at a scale that requires offsetting capital somewhere. Details remain unconfirmed regarding the specific timeline for the layoffs and which business units will be affected. The final scope of the layoffs remains unresolved, leaving many employees uncertain about their future within the company.

The post Meta layoffs: Company prepares for significant workforce reduction appeared first on newscri.