Amazon has begun mass layoffs from its corporate ranks, becoming the latest tech company to shed its workforce amid mounting concerns about the broader economic environment.
- Amazon plans to lay off 260 employees
- Facebook and Twitter have also announced a round of layoffs
- The company posted two consecutive losses this year
On Tuesday, the company told regional authorities in California that it was laying off about 260 employees at various facilities that employ data scientists, software engineers and other company employees.
The cuts are expected to take effect on January 17.
Amazon would not specify how many more layoffs might be in the works, aside from those confirmed by California’s Worker Adjustment and Retraining Notification Act, also known as WARN, which requires the company to provide 60 days’ notice of staff cuts if they 75 or more have more full-time or part-time employees.
Amazon employs more than 1.5 million workers worldwide, mostly casual workers.
Profits fall after pandemic
The online retail giant, along with other tech and social media giants, posted sizeable gains during the COVID-19 pandemic as home-from-home shoppers bought more items online. However, sales growth slowed as the worst of the pandemic subsided and consumers became less reliant on e-commerce.
The Seattle-based company reported two straight losses this year, mostly due to write-downs on the value of its stock investment in electric vehicle startup Rivian Automotive.
The company returned to profitability in the third quarter, but investors were gloomy about weaker-than-expected earnings and lackluster guidance for the current quarter, which is usually good for retailers given the holiday shopping season.
To cut costs, Amazon has already scrapped some of its projects – including subsidiary fabric.com, Amazon Care and cooler home delivery robot Scout.
It has also reduced its physical footprint by delaying or canceling plans to fill some new warehouses around the country.
Mass layoffs are rare
Mass layoffs are rare at Amazon, but the company had rounds of downsizing in 2018 and 2001. On the warehousing side, the e-commerce giant is typically reducing its workforce through attrition.
Given the high costs, the company announced earlier this month that it would stop hiring its corporate workforce, contributing to the freeze on its retail division a few weeks ago.
But the layoffs weren’t far behind.
Employees working at various entities, including cloud gaming platform Amazon Luna, said they were laid off on Tuesday, according to LinkedIn posts.
“As part of our annual operational plan review process, we always review each of our businesses and what we think we should change,” Amazon spokeswoman Kelly Nantel said in a statement.
“While we’ve been through this, given the current macroeconomic environment (as well as several years of rapid hiring), some teams are making adjustments, which in some cases means certain roles are no longer required.”
In a note to the devices and services team that Amazon posted on its website, the team’s senior vice president David Limp said the company was consolidating some teams and programs.
He said those fired in the process were notified Tuesday and the company will work with them to “provide support,” including help finding new roles.
If an employee couldn’t find a new job within the company, Mr. Limp said, Amazon would provide severance pay, outside job placement assistance and so-called bridging pay.
The retail giant follows other tech giants that have cut jobs in recent weeks – a reversal from earlier this year when tech workers were in high demand. Facebook parent Meta said last week it would lay off 11,000 employees, about 13 percent of its workforce.
And Elon Musk, the new Twitter CEO, halved the company’s workforce this month.
Going forward, Daniel Ives, an analyst at Wedbush Securities, said Amazon is likely to maintain its workforce and investments in profitable areas like cloud computing unit AWS, while cutting costs in non-strategic areas like Alexa and other Moonshot projects.
“The clock has struck midnight on Big Tech’s hypergrowth,” said Mr. Ives.
“These companies were hiring at such a staggering rate that it was unsustainable. Now there are some painful steps ahead.”
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