The layoffs, which could arrive this week, will hit the division dedicated to the manufacture of devices, such as the Alexa voice assistant, as well as the sales and human resources departments.
It’s the largest downsizing in the company’s history, founded outside Seattle in 1994.
The figure represents 3% of Amazon’s permanent workers and 1% of the total workforce, which adds up to 1.5 million employees spread throughout the world, most of them a workforce temporarily hired in warehouses or dedicated to logistical tasks.
The adjustment comes at one of Amazon’s critical workload times, with the gift-giving season beginning in the United States with Thanksgiving, continuing with Black Friday sales and ending at Christmas.
Amazon is the latest technology company to announce massive layoffs, after Meta (Facebook), which last week confirmed its plans to get rid of 11,000 of its employees (13%) and Twitter. After his purchase for 44,000 million dollars, Elon Musk left half of the social network’s staff on the street after a few days, some 3,700 people in total.
The pandemic, key to layoffs
The reasons for the latest round of layoffs are to be found in the pandemic. The confinements decreed around the world after the appearance of the coronavirus in early 2020 caused an unprecedented increase in electronic commerce, and, as a consequence, the most profitable year in its history for Amazon, which doubled its workforce (it went from 798,000 employees to end of 2019 to 1.6 million on December 31, 2021) and increased investment in new developments.
The habits acquired during that exceptional time did not prove as durable as the analysts had predicted. As of early 2022, the company’s growth was at the lowest rate in two decades.
The company had to pay for the excesses of the past, and faced the high costs of overinvestment and overly optimistic expansion.
This difficult situation caused revenues to fall in the third quarter of the year. Also, that the capitalization of the company fell for the first time since April 2020 below one billion dollars. Amazon shares have plummeted 41% so far this year and are on track for their worst year since 2008.
The layoffs come at a dire time for the technology sector, which has experienced an unprecedented hiring rush that has left behind a season of savage downsizing.
To the employees that Twitter and Meta sent to the strike queue, we must add those of the Snap social network, which announced in August the dismissal of 20% of its workforce, more than 1,000 workers, as well as those of Peloton (4,000 employees in October), Netflix (500), Lyft, a rival to Uber (700) or the e-commerce payment platform Stripe (about 1,000).
Microsoft and Intel are carrying out, for their part, job cuts of hundreds of workers. Apple and Alphabet (Google) are also trying to contain their personnel costs by first reducing the pace of hiring.
The workforce adjustment, the largest in the company’s history, could arrive this week