Global recession: Amazon to layoff 18,000 staff, 80% more than it estimated
Virendra Pandit
New Delhi: World’s largest e-commerce company Amazon.com Inc., on Wednesday, announced to cut over 18,000 jobs, 80 percent more than it estimated earlier, which shows its fears of a global recession ahead.
The company would begin discussing the moves with affected employees on January 18 and provide severance, transitional health benefits, and job placement to affected workers, the media reported.
With this, Amazon joins other tech giants in making major cuts. On Wednesday, Salesforce Inc. also announced plans to eliminate about 10 percent of its workforce and reduce its real estate holdings. Other top technology companies like Apple and Meta are also slashing jobs in an uncertain economy.
Like many technology companies, Amazon had, amid the waves of the pandemic (2020-22), recruited a large number of employees to deliver parcels to the doorsteps of the locked-down millions worldwide. With the reopening of markets —except in China—however, this staff became ‘surplus’, forcing Amazon to cut jobs.
According to the media reports, although the prospect of layoffs loomed over Amazon for months — the company acknowledged that it hired too many people during the pandemic — the increasing total suggests its outlook has darkened with fears of the global recession in 2023.
Previously, Amazon had estimated to lay off some 10,000 jobs globally. Now it said it is eliminating over 18,000 employees — a significantly bigger number than previously planned — in the latest sign that a technology slump is deepening.
Amazon’s Chief Executive Officer Andy Jassy announced the move in a memo to staff on Wednesday, saying it followed the company’s annual planning process. The reduction is concentrated in the firm’s corporate ranks, mostly Amazon’s retail division and human resources functions like recruiting.
“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” he said. “These changes will help us pursue our long-term opportunities with a stronger cost structure.”
Amazon’s investors gave a positive reaction to the latest belt-tightening efforts, betting it may bolster profits at the e-commerce company. The shares climbed nearly 2 percent in late trading after the job-cut reports emerged.
Eliminating 18,000 workers would be the biggest cut yet for tech companies during the current slowdown, but Amazon also has a far larger workforce than its Silicon Valley peers. It had over 1.5 million employees as of the end of September 2022, meaning the latest cuts would represent about 1 percent of the workforce.
At the time the company was planning its cuts in November 2022, a spokesperson said Amazon had roughly 350,000 corporate employees worldwide.
The world’s largest online retailer spent the end of last year adjusting to a sharp slowdown in e-commerce growth as, with the reopening of economies, shoppers returned to pre-pandemic habits. Amazon delayed warehouse openings and halted hiring in its retail group. It broadened the freeze to the company’s corporate staff and then began making cuts.
Jassy eliminated or curtailed experimental and unprofitable businesses, including teams working on a telehealth service, a delivery robot, and a kids’ video-calling device, among other projects.
Amazon, which started as an online bookstore, is seeing parts of its business level off. But it continues to invest in its cloud-computing and advertising businesses, and video streaming.
The first wave of cuts landed heaviest on Amazon’s Devices and Services group, which builds the Alexa digital assistant and Echo smart speaker, among other products. Layoffs in the unit totaled less than 2,000 people, and that Amazon remained committed to the voice assistant.
