Ecommerce giant Amazon has announced plans to cut more than 18,000 jobs as the tech sector continues to grapple with current economic headwinds.
The 18,000 jobs, which is the largest number in the firm’s history, represents more than one percent of Amazon’s global workforce.
The tech industry has been hit hard by the global economic downturn buoyed by Russia-Ukraine conflict. Most of the firms that increased headcount during the pandemic-induced shift to digital life are now cutting workforce to save cost as life returns to normal, curtailing the online life’s economic boom.
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Amazon, which has a global workforce of 1.5 million employees, said in November that it will “eliminate a number of positions across Devices and Books businesses”, and also there will be “voluntary reduction offer for some employees in our People, Experience, and Technology (PXT) organization.”
The company said additional roles have been added to last year’s plan to increase the number of impacted jobs to 18,000. Most of the affected jobs are from its consumer retail business and its human resources division.
“S-team and I are deeply aware that these role eliminations are difficult for people, and we don’t take these decisions lightly or underestimate how much they might affect the lives of those who are impacted,” CEO Andy Jassy said in a memo to employees. “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.”
Jassy, like other CEOs, acknowledged that Amazon hired rapidly over several years.
“We don’t take these decisions lightly or underestimate how much they might affect the lives of those who are impacted,” he said.
Jassy said Amazon would typically wait to speak directly to people affected by decisions like this but for an employee who leaked it to the press, the communication was hastened.
“We intend on communicating with impacted employees (or where applicable in Europe, with employee representative bodies) starting on January 18,” he said without giving details about countries with the impacted employees.
Jassy, citing economic strains, said “companies that last a long time go through different phases. They’re not in heavy people expansion mode every year.”
Amazon is one of the hardest hit as people returned to normal life. The pandemic-buoyed sales started to decline as in-person activities resume. The resulting revenue drop for companies accelerated as Russia-Ukraine conflict intensified – stirring inflation and setting economies up for potential recession – leading to consumer frugal spending.
The tech sector gradually became a victim of the circumstance. Meta, the parent company of Facebook, Instagram and WhatsApp announced major job cut last year. Others like Salesforce, Twitter – which has cut its workforce by more than half after Elon Musk’s acquisition of the social media company late last year, and video-sharing platform Vimeo, were among Silicon Valley giants that have trimmed their headcount to save cost.
CNBC Jim Cramer, host of Mad Money, said more tech companies are going to cut jobs due to bloated payrolls.