US media reports that Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, could be the latest technology giant to downsize its workforce have triggered trepidation among its 300-400 employees in India, according to people familiar with the matter.
“We have not heard much about the impact (of downsizing) on India. It’s a wait-and-watch situation. Certainly, there is uncertainty,” said a source. An e-mail sent to Meta Platforms did not elicit any response.
The Wall Street Journal, citing people in the know, reported that Meta may lay off several thousands of its employees and clarity may emerge by November 9. If executed, this could be the first major layoff in the tech giant. As of September 30, Meta’s headcount worldwide stood at 87,000.
This comes days after Meta Platform’s profits halved in the third quarter of 2022 to $4.4 billion, from $9.2 a year ago. The social media company reported its revenue at $27.7 billion against $29 billion a year ago. Its sales also declined 4 per cent year-on-year.
The company’s commentary had indicated a tough time ahead. “In 2023, we’re going to focus our investments on a small number of high-priority growth areas. That means some teams will grow meaningfully but most other teams will stay flat or shrink over the next year. In aggregate, we expect to end 2023 as either roughly the same size or even a slightly smaller organisation than we are today,” said Mark Zuckerberg, chief executive officer of Meta Platforms.
But the company situation in India is far better. The net profit of Facebook India Online Services Private Limited, the registered entity of Meta in India, more than doubled in FY22 to Rs 297 crore, from Rs 128 crore in the previous year. Its revenue, too, grew 56 per cent to Rs 2,323.9 crore, from Rs 1,485 crore in FY21, according to the financial statement shared by research firm Toffler.
But Meta’s employee benefit expense in India has not grown as fast. The firm spent Rs 421.1 crore on its employees, including salaries and wages, contributions to Provident Fund (PF) and other funds, employee stock ownership plan (ESOP), staff welfare expenses, etc, in FY22. It was 32 per cent more than Rs 318 crore in the previous year.
Beyond revenue, India is one of the largest markets for Meta’s WhatsApp, Instagram Reels, and Facebook. WhatsApp has over 400 million users; there are over 15 million users on WhatsApp’s small business app. According to reports, WhatsApp Business’ India revenue may reach $1 billion next year. It recently rolled out its platform for Reliance JioMart, its first global initiative.
The other platform that has been a big focus for Meta is Reels. This was launched in India first and then taken globally. Former Indian head Ajit Mohan had told Business Standard in a recent interview that Meta witnessed massive growth in video in India.
When it comes to layoffs by Big Tech in India, Kamal Karanth, an expert on human resources and co-founder of Xpheno, believes the country would not witness a big impact. “Indian outfits of marquee MNCs are largely strategic talent vehicles for accessing high volume engineering and product expertise. Besides the quality of talent, the other key driver for these outfits is the huge cost advantage that MNCs draw vis-à-vis local talent cost in their geographies. In the larger operating context of some of these MNCs, their Indian outfits are a comparatively minor cost slice,” he said.
According to him, the impact of layoff by Twitter on its India team was an outlier. “The impact is also perceivably high as it has impacted a whole operating unit, though the size of the impact on a headcount basis is in the low three digits. It can well pass off as a blip in Twitter’s larger context and scale of the event,” he added.