Meta is gearing up for its largest-ever round of layoffs, which could affect approximately 20% of its nearly 79,000-strong workforce, translating to around 15,800 jobs. This drastic measure is part of a broader strategy to realign priorities while investing heavily in artificial intelligence (AI) infrastructure, with a commitment of $600 billion.

Employees in the wearables and ads divisions have been directed to work remotely as the company braces for impending layoffs. The cuts come on the heels of previous layoffs, where Meta reduced its workforce by 11,000 jobs in November 2022 and another 10,000 in the spring of 2023. Earlier this year, the Reality Labs division also saw cuts impacting more than 1,000 roles.

As part of this restructuring, Meta’s senior leadership has asked managers to plan for potential cuts of 20% or more, although no specific date or final headcount has been confirmed. The uncertainty surrounding the layoffs includes which specific business units will be affected, leaving many employees in a state of apprehension.

Analysts suggest that the cuts may not stop at 20% if AI tools prove to be 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.” This indicates a potential for further reductions if the anticipated efficiencies materialize.

In a strategic move to bolster its AI capabilities, Meta is reportedly converting labor costs into compute capacity by reducing payroll. This shift reflects a growing trend in the tech industry where companies are investing in AI to enhance productivity while managing costs. Meta’s shares rose nearly 3% following reports of the layoffs, signaling investor confidence in the company’s focus on margin improvement.

What observers say

As the company navigates these changes, a Meta 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.” This statement underscores the high stakes involved in Meta’s pivot towards AI and the expectations placed on its leadership to deliver results.

Despite the potential benefits of these layoffs and the shift towards AI, details remain unconfirmed regarding the timeline and final scope of the layoffs. As Meta continues to adapt to the evolving landscape of technology and market demands, the implications of these changes will be closely monitored by industry observers and stakeholders alike.

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Atlassian has announced layoffs affecting about 10% of its global staff, translating to nearly 1,600 employees. This decision comes as the company faces significant financial challenges, including a drop of more than 50% in its share value in 2026. The layoffs will predominantly impact employees in software research and development, with over 900 positions being cut in this area alone.

Reasons Behind the Layoffs

The restructuring is aimed at boosting investment in artificial intelligence (AI) and improving Atlassian’s financial position. Mike Cannon-Brookes, co-founder and co-CEO of Atlassian, stated, “This is the right decision for Atlassian. But that doesn’t mean it’s easy.” He emphasized that the company is taking these steps to self-fund further investment in AI and enterprise sales, while strengthening its financial profile.

Despite the necessity of these layoffs, Cannon-Brookes acknowledged the impact on employees, noting, “Our approach is not ‘AI replaces people’. But it would be disingenuous to pretend AI doesn’t change the mix of skills we need or the number of roles required in certain areas.” This statement reflects the ongoing transition within the tech industry as companies increasingly integrate AI into their operations.

Financial Context and Future Outlook

Atlassian has not made a profit since 2017, and the current restructuring is expected to result in charges of between $225 million to $236 million. This financial strain has prompted the company to make difficult decisions regarding its workforce. The layoffs will affect workers in various regions, including North America, Australia, and India.

Employees affected by the layoffs will receive a minimum severance package of 16 weeks‘ salary, a measure aimed at easing the transition for those impacted. Paul Inglis, a spokesperson for Atlassian, remarked on the situation, stating, “These are experienced professionals who have helped build one of Australia’s most successful technology companies from the ground up.” This highlights the significant contributions of the laid-off employees to the company’s success.

What Lies Ahead

As Atlassian navigates this challenging period, the company’s future remains uncertain. The focus on AI and restructuring may lead to new opportunities, but the immediate impact on employee morale and company culture is yet to be seen. Details remain unconfirmed regarding how these changes will affect the company’s long-term strategy and market position.

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