In a significant sign of a slump in the tech industry, Amazon intensifies its cost-cutting measures by slashing more than 18,000 jobs. This is a much bigger layoff than initially planned.
In a memo to the employees, Wednesday, Andy Jassy, CEO of Amazon.com Inc., said the cuts were part of the annual planning process. The layoffs started last year and were expected to cut around 10,000 jobs. The headcount reduction is mainly concentrated in the corporate office, especially in the human resources recruiting division and retail departments.
Sluggish Outlook in the E-Commerce Sector
While the employees were bracing for layoffs for months as the company conceded it hired too many staffs during the pandemic. The increasing layoffs suggest that the company’s outlook looks not so bright. Amazon joins other tech majors in making substantial job cuts. Salesforce Inc. announced Wednesday its plans to reduce its real estate footprints and cut around 10% of its workforce.
The latest belt-tightening measures drew positive reactions from investors who were betting profits getting a boost for the e-commerce company. Shares of Amazon.com Inc. climbed 2% in late trading Wednesday after Wall Street reported the move.
Though eliminating 18,000 jobs looks like the largest cutdown in the tech industry in the current economic slowdown, one should also keep in mind that Amazon has the highest workforce among its industry peers. The latest layoff represents only 1% of its workforce of about 1.5 million as of September.
In November, when the company was planning the cuts, it had around 350,000 employees in the corporate division globally.
Pre-Pandemic Habits Return
Shoppers returned to pre-pandemic offline shopping resulting in the world’s largest retailer adjusting to the sharp decline in e-commerce growth. Amazon postponed opening new warehouses and halted fresh recruitments in the retail group. First, it freezes the corporate staff hiring and then starts the layoffs.
CEO Jassy curtailed or stopped unprofitable and experimental businesses such as kids’ video calling devices, delivery robots, and telehealth services.
The Seattle-based retail giant is trying to align excess capacity with declining demands. According to some people who know the matter, efforts include selling space to cargo planes.
Amazon started its journey as an online bookstore is now seen certain portions of its current business leveling off. However, it continues to invest in advertising, video streaming, and cloud computing business.
The Devices and Services group was the first to feel the impact of layoffs. This division makes Echo smart speakers and Alexa digital assistants, among other products.
The Amazon group chief informed Bloomberg news last month that layoffs in this division were less than 2000 staff, and the company remained committed to voice assistant products.
Employees in the human resource division were offered buyouts. In November, Jassy informed the employees that more layoffs would happen in the HR and retail team in 2023.
Jassy, in the memo, has informed that affected workers would be given severance, job placement, and transitional health benefits. The company will begin discussing the move with those employees who will be laid off on January 18.
