In what has traditionally been the worst month for layoffs, January is off to a good start thanks to Amazon’s announcement today that it will cut more than 18,000 jobs in an effort to cut costs.
The tech titan’s plans to lay off up to 10,000 employees first surfaced in November. On Wednesday, CEO Andy Jassy emailed employees to admit that the initial estimate was significantly off. He stated that the layoffs would affect the company’s corporate and technology departments and would be a significant acceleration of Amazon’s previously announced cost-cutting plans.
The layoffs, according to Amazon, will begin on January 18 and will primarily affect the company’s Stores and PTX departments. Departments in charge of Amazon’s website, global field operations, and all physical spaces (including warehouses and retail stores) will be affected.
To put these layoffs into context, consider that Amazon had 800,000 employees before the pandemic. By 2021, the number of people employed there will have more than doubled. However, growth slowed to its slowest rate in two decades, despite Amazon spending more and more to attract and retain talent in the increasingly hot tech sector (like by doubling the starting-pay ceiling). Furthermore, by this time, founder Jeff Bezos had handed Jassy the reins of the company, and it was his responsibility to appease the company’s investors. Jassy has been working tirelessly to reverse some of Amazon’s overengineering during the COVID era. Employees have been bracing themselves for action this week after the Seattle headquarters reportedly informed managers of impending layoffs late last year.
This round represents more than 1% of Amazon’s total workforce (administrative and hourly). Corporate planning “has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years,” according to Jassy in a recent note to shareholders, echoing recent executive warnings that they are still in the thick of things. Layoffs. According to fyi, the tech industry lost over 150,000 jobs in 2022, and that number is expected to rise as the month progresses.
Is there anyone Amazon will not lay off? Regular warehouse workers earning an hourly wage. They number in the millions, but because they are self-employed, Amazon rarely has to lay them off due to natural attrition. “We can assume that this is the first step preceding layoffs in the rest of the operations, not just the corporate workforce,” an Amazon union representative in Spain told Reuters. Despite this, he admitted that he is sceptical because “we don’t have any official data.”
However, Jassy’s memo did provide some insight into Amazon’s inner workings: Companies that are doing well are “not in heavy people expansion mode every year,” and Amazon’s leadership urged its employees to keep the company’s motto, “Invent and Simplify,” in mind. We can “overlook the importance of” innovating and simplifying when we are “figuring out what matters most” and “adjusting where we spend our resources and time,” according to Jassy.
This week, massive layoffs were announced at a number of major technology firms, not just Amazon. Salesforce announced just yesterday that it would be laying off 8% of its workforce. This week, smaller technology companies like Stitch Fix and Vimeo also announced layoffs.
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