Snap, which is the parent company of the social media platform Snapchat, has announced that Snapchat shall downsize its workforce size by 20%. The reason Snap lays off its employees, as stated by Evan Spiegal, CEO, is the rising concerns for Snapchat to reduce its costs of operations. The sales figures are not in accordance with the projected growth/sales and hence this decline has affected the bottom line of Snapchat.
Snapchat, in these turbulent times, has opted for an easy way out by deciding to select the most popular tool to reduce costs, i.e., to lay off its workforce. Believing that such a move is the last resort for any company to increase the probability of a soft landing seems cynical in today’s times.
What needs to be seen is that whether the executives responsible for preparing and adopting such unrealistic projections are on top of the list of those 20% employees being layed off.
Spiegel says that Snap is focused on diverting its energies into restructuring the business activities and shall endure to promote community growth, and augmented reality to contribute to revenue generation. Snap shall discontinue other primary or tertiary activities that has little potential to fuel its growth.
Snap’s core team that is responsible for developing mini apps and games to be played within the Snapchat app will be among the most severely impacted. The hardware division which is responsible for new age tech such as AR glasses and Pixy camera drone has cancelled these initiatives. The acquisition of WaveOptics, which is the supplier of AR displays now seems like a move too bold for Snap to digest.
Snap’s stock has plummeted by 80 % in 2022 and the move to fire its employees is definitely not a surprise because Snap did announced its plans to slow down hiring.
Image Source: Google Finance
During the pandemic in 2020, Snap went on an unrealistic looking hiring spree and ended up with a total headcount of 6446 which was a 38% increase from last years numbers.
What does not come around as a surprise is that companies across the tech space have come up with a new buzz word for firing of employees, which is now popularly addressed as restructuring and community growth.
But will this restructuring, which looks like a panic move by technology companies, aid to help keep corporations afloat? After all, Snap is not the only one who has boarded a ship with a hole, which nobody knows show to fix.
