Amazon has confirmed that company layoffs will total more than 18,000 employees, with the bulk of job cuts coming later this month.
While several teams are impacted, the majority of the job cuts will be in the Amazon Stores and People, Experience, and Technology (PXT) organisations.
The layoffs, which represent the largest round of job cuts in the company’s history, are a result of “the uncertain economy,” according to a note from CEO Andy Jassy. He added that Amazon had weathered “difficult economies” in the past and would continue to do so.
Layoffs come after pandemic hiring spree
The layoffs come after a hiring spree during the pandemic, as lockdowns and other precautions caused consumers to turn to online shopping, fuelling Amazon's retail business.
Like other tech company leaders who have announced job cuts in the last six months, Jassy said Amazon had “hired rapidly over the last several years,” but added that the layoffs will help the company pursue more long-term opportunities with a stronger cost structure.
The layoffs will mostly impact the company’s physical stores, which include Amazon Fresh and Amazon Go, and its PXT organisations, which handle human resources and other functions.
Affected employees will receive packages that include a separation payment, transitional health insurance benefits, and external job placement support.
Jassy had first confirmed that layoffs would be occurring on November 17 last year in a public message to employees, though he did not specify the planned number of employees to be laid off.
“Between the reductions we made in November and the ones we’re sharing today, we plan to eliminate just over 18,000 roles,” Jassy said.
Computerworld, citing sources, first reported on December 2 that Amazon was looking to cut about 20,000 employees — about twice as many as had been previously reported.
In his message to employees, Jassy said the company typically waits to communicate these outcomes until they can speak with the people who are directly impacted.
“However, because one of our teammates leaked this information externally, we decided it was better to share this news earlier so you can hear the details directly from me,” he said.
Amazon intends on communicating with impacted employees — or where applicable in Europe, with employee representative bodies — starting on January 18.
Eighteen thousand employees are the equivalent of about 5.5 per cent of Amazon's corporate staff, or about 1.2 per cent of Amazon's 1.5 million workforce including global distribution center and hourly workers.
“S-team and I are deeply aware that these role eliminations are difficult for people, and we don’t take these decisions lightly or underestimate how much they might affect the lives of those who are impacted," Jassy said, referring to Amazon's leadership team.
Amazon faces worker unrest
The announcement comes as Amazon faces growing worker unrest. Employees affiliated with the UK's GMB union in Amazon’s Coventry warehouse announced they would be staging a strike action on January 25, walking out as part of a fight for better pay.
Currently, Amazon warehouse employee pay starts at a minimum of between £10.50 (US$12.60) and £11.45 an hour. Striking workers want that base rate to be increased to £15 an hour.
This is not the first time Amazon has faced union action in recent years. In the US, the company has faced allegations of union-busting when warehouse staff attempted to organise.
In April 2021, 2,654 warehouse workers at the JFK8 facility in Staten Island voted yes to forming a union, with 2,131 voting no, according to a tally by the National Labor Relations Board (NLRB).
Much like the UK-based warehouse workers, pro-union workers at the JFK8 facility say they want better working conditions, longer breaks and higher wages.
Jassy's announcement also comes after a wave of tech sector layoffs in the latter half of 2022. Companies including HP, Cisco, Asana, Zendesk, Meta, Twitter, Stripe, F5, Microsoft, Oracle, Intel's Habana Labs, and DocuSign announced they have or would be laying off workers.
While enterprise IT spending on cloud technology in particular is still expected to grow this year, many tech companies — especially those with strong retail and consumer businesses — have experienced slowing revenue growth overall during the last few quarters during a period of rising central bank interest rates, the war in Ukraine, supply chain disruptions, and a decline in sales of PC and other end-user hardware.
Tech companies continue to lay off staff
As the new year begins, tech companies continue to make job cuts. Cloud-based CRM software provider Salesforce announced it will lay off about 10 per cent of its workforce, roughly 8,000 employees, and close some offices as part of a restructuring plan.
As Salesforce’s revenue accelerated through the pandemic, the company over-hired and can no longer sustain its current workforce size due to the ongoing economic downturn, the company said.
So far in 2023, there have been 14 layoffs at tech companies with 16,515 people impacted, according to TrueUp’s tech layoff tracker. In 2022, there were 1,517 layoffs at tech companies with 237,874 people impacted.
The good news for technology professionals, though, is that many of the layoffs involve non-technical staff — and that a lack of experienced technology talent means that companies have been raising salaries for IT professionals.
In 2022 in the US for example, merit increases for IT pros jumped 5.61 per cent, and this year raises for some technology employees could increase eight per cent, according to according to consultancy Janco Associates.