Amazon has significantly increased its previously planned number of layoffs, with CEO Andy Jassy announcing in a memo to staff that the company is now cutting more than 18,000 jobs. The layoffs, which started last year, were initially expected to affect around 10,000 people and are concentrated in Amazon’s corporate roles, particularly in retail and human resources. This is a further sign of the technology industry’s decline.
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He asserted that Amazon has withstood challenging economic climates in the past and will remain resilient, adding that the changes they are making will enable them to take advantage of potential opportunities with a more solid budget.
Amazon’s decision to increase its layoff total indicates that their current outlook is bleak, similar to the recent decisions made by tech giants such as Salesforce, which announced plans to cut 10% of its workforce and reduce real estate holdings.
Amazon investors responded positively to the company’s recent cost-saving measures, driving the stock up close to 2 percent after the news was reported by the Wall Street Journal. It is believed that these efforts may help to increase profits.
Amazon’s planned cuts of 18,000 workers would be the largest layoff seen in tech companies during the current economic downturn. Amazon, however, employs far more workers than its Silicon Valley competitors, with a total of 1.5 million employees as of September, meaning the cuts would only account for 1% of their workforce.
In November when the company was formulating its reductions, a spokesperson reported that Amazon had a global workforce of around 350,000 employees.
At the end of last year, Amazon had to adjust to a sudden decrease in e-commerce growth as shoppers reverted to pre-pandemic behaviors. As a result, the online retailer put off warehouse openings, paused hiring within its retail division, and extended the freeze to its corporate staff before starting to reduce personnel.
Jassy has cut back or ended experimental and unprofitable ventures, such as teams creating a telehealth program, a delivery robot, and a children’s video chat device, among other projects.
The firm based in Seattle is attempting to match their extra capacity with the need for cooling. This includes attempting to market their unoccupied cargo aircraft space, as reported by those familiar with the situation.
Although Amazon’s online bookstore is no longer growing as it once did, the company has been investing in its cloud computing, advertising, and video streaming services.
The Devices and Services group, which builds Alexa digital assistant and Echo smart speaker, among other products, was affected the most by the initial wave of layoffs. Its leader informed Bloomberg a month ago that the dismissals in the division were less than 2,000 individuals and that Amazon was still devoted to the voice assistant.
In November, Jassy informed employees that the company’s retail and HR teams would be facing additional reductions in 2023, and that members of the Human Resources group and certain recruiters were given buyouts.
On Wednesday, Jassy released a memo informing that the organization would be providing severance, health benefits, and job placement to those who would be affected. He then reprimanded a worker for the leaked news that was reported by the Wall Street Journal. The organization intends to start discussing these changes with the impacted employees on January 18.
Jassy noted that companies that endure for a considerable amount of time tend to go through different phases, and they may not constantly be in a state of growth that involves hiring more and more people.