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According to people who understand the incident, Amazon plans to remove 10,000 jobs from its corporate and technology divisions starting this week (1). It is the biggest job reduction in the company's history. The changes will mostly affect Alexa (2), Amazon's voice assistant for gadgets, its retail segment, and human resources.
Although the number of layoffs is still uncertain and is probably going to happen team by a team rather than all at once as each business completes its plans, if it stays around 10,000, it will represent roughly 3 percent of Amazon's corporate staff and less than 1 percent of its more than 1.5 million global workforces, which are primarily made up of hourly workers.
During the crucial holiday shopping season, when the corporation normally values stability, Amazon has announced layoffs. It demonstrates how swiftly the faltering global economy has pressured Amazon to cut operations that have been overstaffed or underperforming for years.
Additionally, Amazon would be the most recent technology juggernaut or colossus to fire employees after only recently striving to keep them. Concerning a highly competitive labor market, the eCommerce behemoth more than doubled the maximum cash compensation for its tech employees this year.
Although layoffs have been triggered by shifting business models and the unstable economy in the internet sector, Elon Musk also reduced Twitter's workforce by 50% this month after purchasing the firm (3). The parent company of Facebook, Instagram, and WhatsApp—Meta—announced this week that it would let go of 11,000 workers, or around 13 percent of its staff (4).
On the other hand, in recent months, several tech corporations, including Lyft, Stripe, Snap, and other digital firms, have also made layoffs. Despite the lack of information on the layoffs—many are choosing not to comment—it is undeniably the pandemic's impact that led to Amazon's most lucrative period in its history as customers flocked to relocate their shopping online and businesses chose its cloud computing services.
Amazon expanded and experimented with new products and technologies, doubling its staff in two years while investing profits in these endeavors. However, earlier this year, as the pandemic's bullwhip broke, Amazon's growth dropped to the lowest rate in two decades.
Due to decisions to overinvest and quickly expand, changes in consumer behavior, and excessive inflation, the company was forced to incur high costs. Amazon's most recent quarter included a modest uptick as well. However, it has warned investors that growth could slow once again, possibly reaching its slowest rate since 2001, which would lead to widespread layoffs.
According to Wall Street, the corporation has reportedly tightened its belt in the past and can do so again (5). 15% of Amazon's employees were laid off in 2001 during the dot-com bust. The company also let go of a few hundred corporate staffers in the early months of 2018 following another period of strong growth.
Additionally, it has been claimed that Amazon officials met with institutional investors last week as its stocks fell to their lowest point since the epidemic's early stages, wiping out $1 trillion in value since Andy Jassy (6) assumed the position of CEO last year. Jassy has been extensively examining companies to reduce expenses quickly. She previously managed Amazon's lucrative cloud computing division.
During the epidemic, he initially held off on expanding a supercharged warehouse before shifting his attention to other areas of the business. Amazon has also discontinued or scaled back several projects, including Amazon Care (7), which offered primary and urgent healthcare but could not attract enough clients.
Another is Scout (8), the cooler-sized home delivery robot that, according to Bloomberg, employed 400 people, and Fabric.com (9), a company that supplied sewing supplies for thirty years. It also decreased the number of employees by approximately 80,000 from April to September, mostly by attrition among its hourly personnel.
Amazon also stopped hiring for several smaller teams in September, filling over 10,000 open positions in its core retail business in October. Two weeks ago, it stopped hiring for corporate positions across the entire company, including its cloud computing division, for the upcoming few months.
However, the announcement came so quickly that it took almost a week for recruiters to gather talking points for potential employees. The New York Times reported that Amazon's core eCommerce business has been losing billions this year and that everything needed to be reviewed.
Alexa and related devices shot to the top of the company's priority list as Amazon raced to develop the best voice assistant, which officials believed might replace mobile phones as the next indispensable consumer interface. Devices and Alexa have long been considered internally at risk for layoffs.
Amazon hired 10,000 developers to work on Alexa and Echo devices between 2017 and 2018. At one point, an engineer who received a job offer from Amazon also intended to receive one from Alexa.
Although the company has sold hundreds of millions of Alexa-enabled devices, Amazon claimed that other potential revenue sources like voice shaping and products with frequently low margins have not taken off.
In 2018, Echo (10) and Alexa lost about $5 billion; this fall, Amazon held its annual event to introduce new devices. In contrast to previous years, when it featured outlandish items like a sticky note printer and a $1,000 home robot, this year's introduction was noticeably more understated.
The pandemic-related demand spike and rapid expansion put pressure on Amazon's retail business, including its offline and online retail operations and logistics activities. Despite telling investors that it has shelved expansion plans, the corporation has stated that it has done so because of customer anxiety.
Being realistic, the company stated that it was watching for a range of results because many things impact customers' wallets. However, it was still unclear where the spending was headed. Amazon's stock has dropped by roughly 41% for the year, more than the S&P 500's 14% decline, and is on track to have its worst year since 2008.