Amazon.com Inc. is laying off more than 18,000 people, far more than previously expected, in the latest indicator that the technical recession is worsening.
In a memo to employees on Wednesday, CEO Andy Jassy announced the change, claiming it was part of the company’s yearly planning process. The cuts, which began last year, were expected to affect approximately 10,000 workers. The layoffs are focused on the company’s corporate ranks, namely in Amazon’s retail business and human resources activities such as recruiting.
“In the past, Amazon has weathered uncertain and challenging economies, and we will continue to do so,” he said. “With a stronger cost structure, we will be able to pursue our long-term opportunities.”
Though the threat of layoffs has hung over Amazon for months — the business has admitted that it employed too many workers during the pandemic – the growing figure indicates that the company’s outlook has deteriorated. It joins other tech titans in making significant cuts. Salesforce Inc. disclosed earlier Wednesday intentions to lay off around 10% of its personnel and downsize its real estate holdings.
Amazon investors reacted positively to the latest cost-cutting measures, anticipating that it will boost the e-commerce company’s profitability. After the Wall Street Journal initially reported on the idea, the stock rose roughly 2% in late trade.
The 18,000 job cuts would be the most significant for a tech company during the current slump, but Amazon has a significantly larger workforce than its Silicon Valley contemporaries. As of the end of September, it had more than 1.5 million employees, implying that the newest layoffs would represent around 1% of the total.
A representative for Amazon claimed in November that the business employed approximately 350,000 corporate workers worldwide.
The world’s largest online retailer spent the last quarter of last year adjusting to a dramatic slowdown in e-commerce growth as customers returned to pre-pandemic habits. Amazon has postponed warehouse openings and ceased hiring in its retail division. It extended the freeze to the company’s corporate workforce before beginning to make layoffs.
Jassy has closed or scaled back experimental and unproductive ventures, including teams working on a telemedicine service, a delivery robot, and a video-calling device for children, among other initiatives.
In addition, the Seattle-based corporation is attempting to match excess capacity with cooling demand. According to those familiar with the situation, one effort is to try to sell excess capacity on its cargo flights.
Parts of Amazon’s business, which began as an online bookstore, are leveling off. However, it continues to invest in its cloud computing, advertising, and video streaming businesses.
The initial round of layoffs targeted Amazon’s Devices and Services division, which produces the Alexa digital assistant and the Echo smart speaker, among other goods. Last month, the unit’s chief told Bloomberg that layoffs numbered less than 2,000 personnel and that Amazon remained dedicated to the voice assistant.
Some recruiters and employees in the human resources department were offered buyouts. Jassy informed staff in November that more layoffs would occur in its retail and HR departments in 2023.
Jassy stated in the memo on Wednesday that the company would pay severance, transitional health insurance, and job placement to affected employees. In an apparent reference to the Wall Street Journal report, he also chastised an employee for leaking the news. He stated that the company intends to begin addressing the changes with affected staff on January 18.
“Long-lasting companies go through numerous periods,” Jassy explained. “They are not constantly expanding their workforce.”
