TikTok has become the latest tech company to shed jobs, laying off around 60 employees globally across its sales and advertising divisions. The move comes amid a wave of layoffs across the tech sector as companies brace for a potential economic downturn.
TikTok Cuts Jobs to Reduce Costs
As per reports, the job cuts at TikTok were undertaken in order to bring down costs and reorganize its operations. Most of the layoffs were in the company’s advertising department.
A TikTok spokesperson confirmed the job cuts and said in a statement: “We have had to make the difficult decision to reduce our workforce in some functions to align with our business priorities for 2023.”
“We are deeply committed to helping our team members through this transition, and prioritizing support, fairness and consideration,” the spokesperson added.
While the exact number of employees laid off remains unclear, sources claim it is around 60 people globally. The layoffs affected employees in the United States as well as some in China.
This is the first major round of job cuts undertaken by TikTok as it struggles with the effects of the gloomy economic climate.
Lead Up to TikTok’s Move
TikTok’s decision mirrors recent workforce reductions across major technology firms such as Amazon, Microsoft, Google, Salesforce and others. With rising interest rates, record inflation and fears of a recession, tech companies seem to be preparing for leaner times going forward.
Meta, Twitter, Snap and other tech firms undertook major layoffs last year as digital advertising slowed and valuations dropped for tech stocks.
TikTok was continuing its rapid expansion over the past two years, riding on pandemic-fueled growth in users and time spent on its short video app. However, there are signs that its user growth is now tapering off.
As per estimates, TikTok may miss its revenue target for 2022 amid the downturn in the digital advertising market. This seems to have prompted the company to cut costs by shedding jobs.
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What Next for TikTok?
While TikTok still seems firmly placed as one of the top apps globally in terms of popularity and user numbers, it is starting to feel the effects of the economic pressures impacting the wider tech sector.
The layoffs indicate that after a blockbuster couple of years, TikTok is resetting its operations to align with the changing business climate.
As the digital advertising market struggles, analysts expect TikTok’s revenue growth to slow substantially over the next year or two. However, given its vast user base and their high engagement levels, most experts believe TikTok will remain resilient despite the challenging conditions.
TikTok is expected to keep focusing on key markets like the United States, United Kingdom and Southeast Asia that offer the highest monetization potential.
It may also look to diversify revenue streams beyond just advertising, similar to platforms like Facebook, Instagram and YouTube. This could include features like tipping, ecommerce, subscriptions and more.
The job cuts are unlikely to severely impact TikTok’s popularity with Generation Z users. As it continues engaging users with its hallmark short videos, expect TikTok to remain a top social media platform over the next few years despite some speed bumps along the way.
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