Dive briefs:
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Following the review of operations, Amazon is laying off more employees in its retail business, CEO Andy Jassy told employees Wednesday. Jassy said he publicly posted the news after it leaked.
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According to Jassy’s blog post, including job cuts confirmed in November, Amazon plans to “reduce more than 18,000 roles,” primarily in Amazon Stores and the People, Experience, and Technology divisions.
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“These changes will help us pursue long-term opportunities with a stronger cost structure,” he said. Affected employees will receive severance pay, temporary health insurance benefits, and outside employment support, he said.
Dive Insight:
Amazon is doing a characteristic downshift. In total, the significant number of job cuts indicates a correction to the company’s overexpansion as the pandemic boosted the growth of online sales. And it signals that we may be entering a new, more profit-oriented era.
The layoffs in November came with a hiring moratorium at AWS, the company’s reliably profitable cloud division.
AWS experienced slower growth in the second half. Brian Olsavsky, his CFO at Amazon, said on the Oct. 27 earnings call that the decline was due to “the continued impact of widespread inflation, higher fuel prices and rising energy costs.”
“We expect these impacts to persist through the fourth quarter,” Olsavsky said. “We are also taking steps to tighten the belts, such as suspending hiring in certain businesses and scaling back products and services for which we believe resources would be better spent elsewhere. “
Amazon’s job cuts are part of a larger trend impacting the tech sector.
Forrester Vice President and Principal Analyst JP Gownder told CIO Dive in an email.
More than 1,000 tech companies, including Meta and Microsoft, will lay off more than 150,000 employees in 2022, according to Layoffs.fyi, while tech talent remains in high demand in other sectors. This might soften the blow for techies, but not for others going through layoffs.
“Many tech companies seem to have gone too far in terms of hiring over the last few years,” Gownder said.
Global Data’s managing director Neil Sanders said in an email that the e-commerce giant has added more than 1 million employees over the past five years and has had “especially frenetic expansion” during the pandemic. .
“All of these activities were based on the erroneous assumption that sales of Amazon’s products and services would continue to grow rapidly. It’s been bullish and generous with its staffing in those departments, but it’s clear that the steep upward trajectory that Amazon embarked on in the years of the pandemic is coming to an end.”
In her blog post, Jassy defended the drastic cuts and tried to assure investors that the company’s disruption efforts would continue nonetheless.
“These changes will help us pursue long-term opportunities with a stronger cost structure. I’m optimistic that will be creative, witty and crafty.
Cuts are prudent, but Sanders warned that they risk tightening up the ship.
“The company has sufficient financial strength to continue operating, but if the environment becomes tougher, it will have to reduce its investment in innovation,” he said. “Given that this has been a hallmark of Amazon’s success over the years, this is an alarming prospect.”
