Amazon plans to remove more than 18,000 employees; read why

Key Takeaways:

• The CEO of tech giant Amazon claims that the company will eliminate more than 18,000 jobs in order to cut costs.
• With a focus on cost-cutting, Amazon announced in November that it would start a round of layoffs, but it did not say how many jobs it would eliminate.
• Amazon is the most recent of several industry giants to announce layoffs in recent months. The US Big Tech sector is still in trouble.

According to the CEO of the tech giant Amazon, it plans to eliminate more than 18,000 jobs to reduce costs.

He continued by saying that the announcement had been made earlier “because one of our teammates externally leaked this information.”

The company employs about 300,000 people corporately, so the job cuts represent about 6% of that workforce.

As consumers cut back on spending due to the cost of living crisis, Amazon is the most recent major technology company to announce significant layoffs.

In a message to staff, Amazon’s CEO Andy Jassy said, “We are working to support those impacted and are offering packages that involve a separation payment, transitional health insurance benefits, as well as external job placement support.”

The action follows the technology juggernaut’s announcement last year that it would reduce its headcount without providing a specific number of job cuts.

Where applicable in Europe, Mr Jassy said the company would speak with organisations representing employees, but he did not say where the affected employees were.

Additionally, he stated that the People, Experience, and Technology team and the Amazon Stores operations would see the “majority of role eliminations.”

More pain ahead

Amazon announced in November that it would begin a round of layoffs as it focused on cutting costs, but it did not specify how many jobs it would eliminate.

At the time, the company was expected to eliminate 10,000 jobs, according to US media.

The company warned it had overhired during the pandemic, had already implemented a hiring freeze, and stopped some of its warehouse expansions.

Additionally, it has taken steps to close off some areas of its operations by shelving plans for personal delivery robots.

Reviewing Amazon’s operations, according to Mr Jassy, “has been tougher given the uncertain economy and because we’ve hired rapidly over the last several years,” he wrote in the note.

“Long-lasting businesses go through various stages. They don’t constantly have heavy population growth, “Added he.

Tough times for technology

The US Big Tech industry is still struggling; Amazon is the most recent of several industry titans to announce layoffs in the latest months.

Tech companies are being hard hit by a potent confluence of falling advertising revenues due to businesses cutting costs and consumers cutting back on spending as the cost of living crisis bites.

They had also passed the peak of their popularity during pandemic lockdowns when online activity soared as people were bored at home.

Amazon has already disclosed that it will scale back on initiatives like the Echo, also known as Alexa, and delivery robots, which were merely nice-to-haves but didn’t generate any revenue.

According to anecdotal evidence, companies in Silicon Valley often hire and retain talented employees at attractive salaries even when they are not immediately needed to prevent them from joining competitors. This culture appears to be a luxury that big tech cannot continue to support.

According to Ray Wang of the Silicon Valley-based consultancy Constellation Research, “tech companies would frequently remove only the bottom 1% to 3% of their workforce before the pandemic.”

Wedbush Securities’ Dan Ives stated that he thinks Amazon will experience “more pain ahead” as consumers tighten their purse strings.

Jassy is ripping off the bandage to protect margins because Amazon is experiencing worse macroeconomic conditions, he claimed.