Amazon to axe 18,000 jobs as it cuts costson January 5, 2023 at 7:40 am

Amazon aims to shed more than 18,000 roles as it cuts costs, the technology giant’s boss says.

He added the announcement was brought forward “because one of our teammates leaked this information externally”.

The job cuts amount to around 6% of the company’s roughly 300,000-strong corporate workforce.

Amazon is the latest big technology firm to unveil major layoffs as the cost of living crisis sees customers cut back on spending.

“We are working to support those who are affected and are providing packages that include a separation payment, transitional health insurance benefits, and external job placement support,” Amazon’s chief executive Andy Jassy said in a message to staff.

The move comes after the technology giant said last year that it would reduce its headcount without putting a figure on how many jobs would be cut.

Mr Jassy did not specify where affected employees were located, but he said the firm would communicate with organisations that represent employees “where applicable in Europe”.

He also said the “majority of role eliminations” would be in the Amazon Stores operations and its People, Experience, and Technology team.

In November Amazon said it was starting a round of layoffs as it focused on reducing expenses but did not give a figure of how many jobs it would cut.

At the time US media reported that the company would shed around 10,000 roles.

The firm had already introduced a hiring freeze and halted some of its warehouse expansions, warning it had over-hired during the pandemic.

It has also taken steps to shut some parts of its business, cancelling projects such as a personal delivery robot.

Mr Jassy said in the note that reviewing Amazon’s business “has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years.”

“Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year,” he added.

Times continue to be tough for US Big Tech – Amazon is the latest in a string of giants to announce layoffs in recent months.

A potent combination of a downturn in advertising revenues due to businesses seeking to save cash, alongside consumers spending less as the cost of living crisis bites, is hitting tech firms hard.

Their boom time during pandemic lockdowns, when online activity rocketed while people were bored at home, has also come to an end.

Amazon has already announced that it’s cutting back on projects like the Echo (better known as Alexa) and delivery robots – which were nice-to-haves but not actually making money.

Anecdotally, there’s a tendency in Silicon Valley for firms to hire and retain talented workers on attractive salaries, even if they’re not immediately needed, primarily in order to stop them working for rivals. It looks like this culture is a luxury which big tech can no longer afford to maintain.

“Prior to the pandemic, tech companies would often remove only the bottom 1% to 3% of their workforce,” Ray Wang from the Silicon Valley-based consultancy Constellation Research told the BBC.

Dan Ives from investment firm Wedbush Securities said he believes Amazon will face “more pain ahead” as customers tighten their belts.

“Amazon is seeing darker macroeconomic conditions and Jassy is ripping the band-aid off to preserve margins,” he said.

Tens of thousands of jobs are being shed across the global technology industry, amid slowing sales and growing concerns about an economic downturn.

In November Facebook owner Meta announced that it would cut 13% of its workforce.

The first mass lay-offs in the social media firm’s history will result in 11,000 employees, from a worldwide headcount of 87,000, losing their jobs.

Meta chief executive Mark Zuckerberg said the cuts were “the most difficult changes we’ve made in Meta’s history”.

The news followed major layoffs at Twitter, which cut about half its staff after multi-billionaire Elon Musk bought the firm in October.

Amazon started laying off staff as early as November, according to LinkedIn posts by workers who said they had been impacted by job cuts.

Posts seen by the BBC included those from employees in Amazon’s Alexa virtual assistant business, Luna cloud gaming platform division and Lab126 – the operation behind the Kindle e-reader.