American online retail giant Amazon is set to send home 9,000 employees as part of its cost-cutting measures in an environment of muted economic activities and rising cost of living amid other challenges.
The firm’s decision comes in the midst of a series layoffs that has hit the technology sector over the recent past attributed to the uncertainty surrounding the global economy.
Amazon job cuts will mainly affect cloud computing and advertising, sections which were thriving before their expenditure was subjected to deeper scrutiny in cost-cutting strategy.
At its peak, Amazon boasted staff in the region of 1.5 million worldwide. However, this has dropped significantly with 27,000 positions have been eliminated in recent months, with January alone witnessing as many as 18,000 job losses.
Amazon president and chief executive Andy Jassy termed the move a “difficult decision” but hastened to add that it was the only option that would ensure the firm’s fortunes remain healthy in the long term.
Amazon was one of the companies whose list of employees was growing rapidly before economic uncertainty stuck. Its total number of employees in 2022 was 1,541,000, a 4.17 percent decline from 2021. In 2021 the retail giant had 1,608,000 workers on its payroll, a 23.88 percent rise from 2020 when they were 1,298,000, a 62.66 percent more from 2019.
However, things have taken a turn for the worse with the number of employees on a rapid decline. Jassy noted that “given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount,” he continued.
The number of new employees was particularly sharp during the Covid-19 when movement restrictions meant people purchased most of the goods online. However, the boom that tech firms reaped from the pandemic has tremendously slowed as the cost of living crisis spikes.
Amazon is not the only tech firm experiencing tough times. Google and Facebook-owner Meta are right in the mix, and they too have been compelled to take a number of measures in a bid to tame costs.
Meta said last week it would send home10,000 employees this year, kicking off a second round of layoffs for the sector following its elimination of more than 11,000 roles in 2022.
In a note to staff that Amazon posted online, its CEO Andy Jassy said the decision was driven by an analysis of priorities and uncertainty about the economy.
“Some may ask why we didn’t announce these role reductions with the ones we announced a couple months ago,” he wrote. “The short answer is that not all of the teams were done with their analyses in the late fall.”
“Given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount.”
Amazon last month painted a gloomy picture of its performance going forward, warning that itsoperating profit was likely to continue sliding in the current quarter due to the financial impact of consumers and cloud customers cutting spending.
Amazon has however come under criticisms for the layoff with the Athena Coalition, a labour lobby saying that “None of these layoffs have to happen. Jassy is choosing to make them happen to pad Amazon’s bottom line.”
The layoffs will affect Amazon’s streaming unit Twitch with the unit’s CEO Dan Clancy, saying the platform will lay off more than 400 workers.