Firing employees to manage costs have been the norm of the year, but this month alone has seen three of the world’s leading companies fire thousands of employees (though it has backfired for some). Now, a report by The New York Times informs that ecommerce tech behemoth Amazon intends to lay off as many as 10,000 employees this week, just shy of the 11,000 that Facebook-parent company Meta was looking to fire.
These job cuts seem to primarily focus on Amazon’s devices division, which includes employees working on the popular Alexa voice assistant – it had an operating loss of more than $5 billion last year – the company’s retail division, and its human resources (HR) department. If Amazon follows through with its plans and fires what represents around 3% of its corporate and tech personnel, then it will be initiating the largest round of layoffs in its 28-year-old history.
These layoffs, which also represent less than 1% of its global work force, could start as soon as this week. Rather than firing all 10,000 employees at once, it is likely that the eliminations will roll out team by team.
The news is hardly surprising, given the projections of an upcoming recession and an economic downturn persisting in the global markets. Amazon has already shed $1 trillion in market value ever since Andy Jassy took over the reins as CEO – earning the dubious distinction to be the first-ever to do so – as it clocked a slowdown in sales. As it failed to churn out profits over the quarters this year, the company witnessed a slower rate of growth as losses started to mount amidst higher costs and consumers and businesses spending lesser amount of money on its e-commerce platform.
Last month, it warned that its rate of growth could fall to its lowest level since 2001 and projected that the holiday shopping season – that wraps up the end of the year – could see the company’s sales slow to as low as 2% and add to the rocky patch that tech companies have been going through for the better half of the past 11 months.
Like Meta, Amazon had clocked stellar growth over the past two years as the pandemic resulted in the company going through its most “profitable era on record,” according to the NYT report, as the unprecedented push to all things digital resulted in a surge in e-commerce and online shopping. Like Meta, Amazon grew and overinvested in areas, while it went on a hiring spree to increase its headcount to over 1.5 million employees across the world.
This year, however, forced companies to change their business models as the pandemic-induced growth slowed to a trickle and individuals focussed on offline shopping once more. As the global economy started to sour and piled the pressure on companies, who were left scrambling for cash and growth, their new-found focus on profitability led many to slash costs at the cost of their employees. Amazon joined the band by freezing hiring in smaller teams in September, and later froze hiring in corporate roles, including its cloud computing arm, last month.