NEW YORK — Amazon has begun mass layoffs in its corporate ranks, becoming the latest tech company to trim its workforce amid rising fears about the wider economic environment.
On Tuesday, the company notified regional authorities in California that it would lay off about 260 workers at various facilities that employ data scientists, software engineers and other corporate workers. Those job cuts would be effective beginning on Jan. 17.
Amazon would not specify how many more layoffs may be in the works beyond the ones confirmed through California’s Worker Adjustment and Retraining Notification Act, also known as WARN, which requires companies to provide 60 days’ notice if they have 75 or more full-time or part-time workers. Amazon employs more than 1. 5 million workers globally, primarily made up of hourly workers.
The online retail giant, like other tech and social media giants, saw sizable profits during the COVID-19 pandemic, as homebound shoppers purchased more items online. But revenue growth slowed as the worst of the pandemic eased and consumers relied less on ecommerce.
The Seattle-based company reported two consecutive losses this year, driven mainly by write-downs of the value of its stock investment in electric vehicle start-up Rivian Automotive. The third Quarter , saw the company return to profitability, but investors weren’t happy about the lower-than-expected revenues and the lackluster forecasts for the next quarter. This quarter is usually good for retailers because of the holiday season.
In an effort to cut back on costs, Amazon has already been axing some of its projects — including subsidiary fabric.com, Amazon Care, and the cooler-size home delivery robot Scout. Amazon has also been reducing its physical footprint, delaying or even cancelling plans to move into new warehouses throughout the country. And Amazon Chief Financial Officer Brian Olsavsky has said the company was preparing for what could be a slower growth period and would be careful about hiring in the near future.
Mass layoffs are rare at Amazon, but the company has had rounds of job cuts in 2018 and in 2001 during the dot-com crash. The ecommerce company typically reduces warehouse staff through attrition.
Faced with rising costs, the company declared earlier this month that it would halt hiring corporate workers. This is in addition to the freezing it had placed a few weeks ago on its retail division. But the layoffs weren’t far off. Employees who work in different units, including voice assistant Alexa and cloud gaming platform Amazon Luna, said they were let go on Tuesday, according to LinkedIn posts. Some of them were based in Seattle, where the company has its headquarters.
“As part our annual operational planning review process we always look at all of our businesses to see what needs improvement,” Kelly Nantel, an Amazon spokesperson said. “As we’ve gone through this, given the current macro-economic environment (as well as several years of rapid hiring), some teams are making adjustments, which in some cases means certain roles are no longer necessary.”
In a note to the devices & services team that Amazon shared on its website, the team’s senior vice president David Limp said the company was consolidating some teams and programs. He said those laid off in the process were notified on Tuesday and the company will work with them to “provide support,” including assistance in finding new roles. If an employee cannot find a new role within the company, Limp said Amazon will provide a severance payment, external job placement support and what he called transitional benefits. The retail giant follows the lead of other tech companies that have had to cut jobs over recent weeks. This is a change from when workers in tech were highly in demand earlier in this year. Facebook parent Meta said last week it would lay off 11,000 people, about 13% of its workforce. And Elon Musk, the new Twitter CEO, slashed the company’s workforce in half this month.
Going forward, Wedbush Securities analyst Daniel Ives said he believes Amazon will likely sustain its workforce and investments in profitable areas such as the cloud computing unit AWS, while trimming costs in non-strategic areas like Alexa and other moonshot projects.
” The clock is ticking in the realm of big tech hyper-growth,” Ives stated. It was impossible to sustain the hiring rate of these companies. Now there’s some painful steps ahead.”
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