Amazon Dismisses Thousands Of Employees In Bid To Reduce Costs

Amazon unveiled a round of dismissals as the e-commerce behemoth reduces costs in response to persistent economic headwinds.

Andy Jassy, who succeeded Amazon founder Jeff Bezos as chief executive two years ago, said in a message to staff that the layoffs would primarily be concentrated in retail and human resources divisions. The move follows dismissals in the company’s devices and books units at the end of last year and brings the total headcount reduction to some 18,000 employees.

“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” Jassy wrote. “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.”

The reductions in payroll occurred after Amazon Senior Vice President of People Experience and Technology Beth Galetti informed employees last year that the company would institute a freeze on incremental hires in the corporate workforce.

“We anticipate keeping this pause in place for the next few months, and will continue to monitor what we’re seeing in the economy and the business to adjust as we think makes sense,” she remarked at the time.

Employees impacted by the layoffs will receive “a separation payment, transitional health insurance benefits, and external job placement support,” according to Jassy. Share prices for Amazon fell 1% on Thursday; the announcement had previously been leaked by an employee and published in a report for the Wall Street Journal.

The dismissals will impact roughly 5% of corporate positions and 1.2% of the company’s overall workforce, which exceeded 1.5 million as of the third quarter, according to a recent earnings report. Amazon saw a net income of $2.9 billion in the third quarter, marking a decline from $3.2 billion one year earlier.

Share prices for Amazon have decreased nearly 49% over the past year as technology companies bear the brunt of recent stock market selloffs. Industry leaders are slashing costs in the expectation that continued volatility will emerge from inflationary pressures, supply chain bottlenecks, geopolitical tension, and efforts from the Federal Reserve to battle rising prices.

Last year marked one of the worst in stock market history. The S&P 500 index fell nearly 20%, while the technology-heavy NASDAQ plummeted more than 33%.

Technology companies dismissed more than 90,000 workers last year, according to a report from CrunchBase, which included both small ventures and established firms. News of the layoffs at Amazon came as Salesforce, which develops business software solutions for customer relationship management and marketing automation, dismissed one-tenth of workers.

“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” Salesforce CEO Marc Benioff told employees. “I’m grateful for every single one of you who has contributed to our continued success as a company, and the hard work and sacrifices you have made to generate success for our hundreds of thousands of customers.”

The latest rounds of staff reductions indicate that technology executives and investors remain pessimistic in the new year. Some companies have been criticized for hiring sprees that followed the end of the lockdown-induced recession and an adjacent rise in consumer demand.

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