Amazon cuts 18,000 jobs to lower costs

Amazon cuts 18,000 jobs to lower costs

5 Jan    Finance News, News

Amazon is cutting more than 18,000 employees in the biggest round of lay-offs by a technology giant yet.

The world’s largest retailer, which rode a surge in demand at the height of the pandemic, is now moving to cut costs amid cooling demand and fears of recession.

Having started reducing its vast workforce in November, amid reports it was targeting about 10,000 roles, the group confirmed last night that it had decided to eliminate more. It will begin informing affected staff later this month.

Andy Jassy, Amazon’s chief executive, said most of the lay-offs would affect its retail and human resources divisions. The company, which recruited rapidly after the onset of Covid-19 triggered an e-commerce boom almost three years ago, has more than 1.5 million workers, including about 300,000 corporate employees.

“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” said Jassy, who succeeded Jeff Bezos as its boss in 2020. “These changes will help us pursue our long-term opportunities with a stronger cost structure; however, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles.

“Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year.”

Based in Seattle, Washington, Amazon boasts a sprawling range of interests including retail, streaming, cloud computing and advertising. The business is based in Seattle, Washington, and was founded by Bezos in 1994.

Currently valued at $870 billion on the stock market, the company’s stock has halved over the past year as it counted the cost of rampant inflation and slowing demand.

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Many prominent tech groups have cut employees in recent months, with tens of thousands of lay-offs announced last year. The software giant Salesforce said yesterday it would cut 10 per cent of its workforce and shut some offices.

While Amazon typically waits to confirm such moves until after they have been completed, Jassy, 54, said it was pre-announcing details of the upcoming lay-offs “because one of our teammates leaked this information externally”. Hours earlier, the Wall Street Journal reported that the company had increased the number of roles that it intended to eliminate.

More companies are expected to follow suit. “The Salesforce and Amazon layoffs add to the trend we expect to continue in 2023 as the tech sector adjusts to a softer demand environment,” Dan Ives, technology analyst at Wedbush Securities, said. “We expect more tech layoffs to persist as the tech sector was spending money like 1980’s Rock Stars to keep up with demand and now pivots.”

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