Meta Turbulence: How India went from key focus market to leadership layoffs
Experts speculate that though Meta India clocked good earnings in FY22, it is quite possible that its FY23 ad revenues won't be as good
Published - Jun 1, 2023 8:38 AM | 7 min read
Meta CEO Mark Zuckerberg is ''all in'' on India and the country is a “lighthouse” for Meta and at the “forefront” of innovation in areas such as Reels, business messaging and the WhatsApp JioMart partnership, said Nicola Mendelsohn, Vice President, Global Business Group at Meta in an interview to a business publication in September 2022.
Cut to 2023, the tech giant hands over pink slips to a bunch of India staff including top executives like India’s director of marketing Avinash Pant, director and head of media partnerships Saket Jha Sourabh and director of legal Amrita Mukherjee. This was reportedly the third round of layoffs at the company. Besides the latest round of layoffs, Meta India, over the past few months, has also witnessed some high-profile exits. Last year in November, Meta’s India head Ajit Mohan quit the company and joined rival Snap Inc as APAC President. Six months prior to that, Sandeep Bhushan, who was the Head of Global Marketing Solutions at Meta, called it quits.
So, what is plaguing Meta India?
The latest layoffs are part of the company’s larger restructuring plan announced in March to eliminate 10,000 roles globally amid economic headwinds. While the number of total India staff and number of sacked employees in India is not immediately clear, it is believed that nearly three dozen people have lost their jobs suddenly. Some of them shared their layoff experience on LinkedIn as well which raises a serious question mark over the company’s Human Resource policy.
The India development is part of Meta’s fresh round of layoffs that was set to impact about 6,000 employees globally. These job cuts were part of the company’s so-called “Year of Efficiency” in which Meta is being restructured to cut costs.
The series of exits and layoffs at the tech giant’s India arm have shocked the entire media industry, especially since India is a very fast growing market and likely to be that for a few years.
Meta India accumulated huge profits and ad revenues in FY22 in the country. Facebook India online services, the flagship registered entity for Meta in India, clocked gross ad revenues of Rs 16,189 crore in fiscal year 2021-22, a 74% year-on-year growth as per the latest regulatory filings by the company. The company's net profit grew by 132% year on year to Rs 297 crore during the same period. In contrast, Meta’s global revenue growth has almost stagnated over the past few quarters, ranging from 2-6 percent, necessitating the global layoffs.
“Firing its senior-most staff from one of the most profitable markets raises a serious question over the long-term strategy of Meta which professes India to be a key market,” a senior industry analyst pointed out.
India most important market: Meta officials said three weeks ago
Interestingly, Arun Srinivas, Director & Head of the Ads Business of the US-based tech giant, told e4m on May 10 this year, “India is our largest user base across all three Meta plaftorms-Instagram, FaceBook and Whatsapp- and Reels feature has grown significantly since it was launched three years ago and now it is the fastest growing segment for Meta India.”
Facebook's user base in the country touched 440 million in FY22.
Meta Co-founder and CEO Mark Zuckerberg had been calling India his “most important market” since his maiden town hall at IIT Delhi in 2015. Just a month before this, Prime Minister Narendra Modi, during his trip to the United States in 2015, visited Facebook’s Menlo Park headquarters in California.
Zuckerberg had set his sights firmly on India, a market that had illustrated a tremendous appetite for his offerings. Even in December 2020, during a fireside chat with Reliance Industries Chairman Mukesh Ambani, Zuckerberg stated that India was a “very special and important country” with a remarkable entrepreneurship culture, as he sought to push deeper the just-launched payments services that allow users to make payments over WhatsApp.
“Facebook opened its first office in Hyderabad in 2010. From 2010 till Ajit Mohan’s departure in 2022, India used to be largely a sales office for Meta. With top level layoffs, it seems the company has gone back to being mere a sales office again,” analysts wonder.
Impact on multiple ecosystems?
Trimming of the workforce impacts innovation and growth. It also serves as a reminder of the human impact of layoffs and the long term strategy of the company for that particular region.
A tech expert said, “Such a crisis dashes the chances of Meta’s future investments in India, especially the content and curator ecosystems.”
Dwindling ad dollars and declining growth in the post-pandemic world globally has forced many tech companies to trim their workforce. In 2023 alone, layoffs have cost tens of thousands of tech workers their jobs. The workforce reductions have been driven by the giants like Google, Amazon, Microsoft, Yahoo, Meta and Zoom. Startups, too, have announced cuts across all sectors, from crypto to enterprise SaaS.
Most of these companies cite similar reasoning to justify the layoffs; such as “macroeconomic environment and a need to find discipline on a tumultuous path to profitability.”
Experts speculate that it is quite possible that despite earning huge profits and ad revenue in FY22, Meta India’s ad revenues are not as good in FY23 which turned out to be particularly bad for most platforms. The company has not filed its financial report for FY23 at the Registrar of Companies yet.
Karan Taurani of analyst firm Elara Capital says, “The Meta financials seem to be strong for FY 22 because that time the market was not impacted by the macro uncertainty. The macro uncertainty started off in FY23, around the month of June-July, because of higher interest rates, and because of higher inflation in the US market. So, I think the impact will come in FY 23 India financials.”
“Going ahead in terms of FY24 also, there are concerns around innovation, there are concerns around the similar growth profile, and most of these companies have invested very aggressively in a market like India. So, maybe just some near term measure to just recheck the strategy”, Taurani explains.
No comments, says Meta India
In response to e4m detailed questionnaire to understand the number of sacked employees and their roles and seeking reasons behind the layoff despite huge profits in India, Meta India official said, “We have no comments to offer.”
e4m was directed to check the Meta CEO Mark Zuckerberg’s old blog dated March 24 which was addressed to Meta employees. Excerpts of the blog are:
“Meta is building the future of human connection, and today I want to share some updates on our Year of Efficiency that will help us do that. The goals of this work are: (1) to make us a better technology company and (2) to improve our financial performance in a difficult environment so we can execute our long term vision.”
“Here’s the timeline you should expect: over the next couple of months, org leaders will announce restructuring plans focused on flattening our orgs, canceling lower priority projects, and reducing our hiring rates. With less hiring, I’ve made the difficult decision to further reduce the size of our recruiting team. We will let recruiting team members know tomorrow whether they’re impacted. We expect to announce restructurings and layoffs in our tech groups in late April, and then our business groups in late May. In a small number of cases, it may take through the end of the year to complete these changes. Our timelines for international teams will also look different, and local leaders will follow up with more details. Overall, we expect to reduce our team size by around 10,000 people and to close around 5,000 additional open roles that we haven’t yet hired.”
(With inputs from Nilanjana Basu)
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