Amazon Makes ‘Difficult Decision’ to Cull 18,000 Staff Amid 'Uncertain Economy'

The precarious economy that is predicted to face a protracted downturn in 2023 triggered a swathe of layoffs across the tech industry, with Twitter CEO Elon Musk halving his newly-acquired company's head count , Meta*, the parent company of Facebook and Instagram, announcing layoffs, as have tech firms such as Lyft, Stripe, Snap and others.

Amazon.com, Inc. is to lay off around 18,000 staff as part of the massive e-retailer’s move to tighten its belt in the face of a looming extended economic downturn.

Amazon Stores and the Amazon's People Experience and Technology Solutions (PXT Solutions) team are among the ones to suffer cuts, revealed a memo from CEO Andy Jassy. Shared with Amazon staff, the announcement made a reference to the US media reports on the cuts made at the end of 2022, stating:

“We typically wait to communicate about these outcomes until we 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.”

Jassy added:

"Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so... Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year.”

Amazon will begin to inform those employees who are about to lose their jobs as of January 18, CEO Andy Jassy wrote.

Broad Cost-Cutting

Multiple outlets reported in November that Amazon intended to shed some 10,000 work positions, with the cull impacting the company’s devices organization, retail division, and human resources. The paring back was to be the largest the vast Internet-based enterprise ever made.

When the COVID-19 pandemic first struck, bringing with it lockdowns and other restrictions, it generated what has been decribed as Amazon’s most profitable stint on record. With consumers forced to shop online and companies flocked to avail themselves of its cloud computing services. Two years of surge on the back of the pandemic witnessed Amazon double its work force, investing the gains into expansion. But the pandemic wound down, people's shopping habits reverted to what they had been before the health scare, and inflation soared.

The multinational technology company’s growth began to grind down to its lowest rate in two decades. Facing backlash from the enthusiastic overinvesting, the company turned its gaze to cost-cutting measures. Amazon laid off about 10,000 corporate and technology employees at the end of 2022, and now the cull will reach 18,000.

This comes as Google, YouTube, and Meta* also reported a second-straight decline in revenue in last year's third-quarter amid the worsening economy. Meta had announced in November they were firing more than 13% of their staff after their company’s value nosedived from $1 trillion down to around $250 billion. Twitter fired about half of its workforce after Tesla and SpaceX CEO Elon Musk bought the company for $44 billion. Other tech companies have also been riding a similar wave of layoffs.

The job reductions come as the US economy is expected to face a grinding slowdown that might drag into 2024.

The term suggested by Moody’s Analytics to describe the situation is “slowcession,” with a full-on economic downturn ostensibly to be narrowly avoided.

“Under almost any scenario, the economy is set to have a difficult 2023. But inflation is quickly moderating, and the economy’s fundamentals are sound. With a bit of luck and some reasonably deft policymaking by the Fed, the economy should avoid an outright downturn,” Moody’s Analytics chief economist Mark Zandi wrote in a report on January 3.

*Meta (Facebook and Instagram) is banned in Russia over extremist activities.