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FutureStarrExploring the Implications of Amazon India's Latest Layoffs
Amazon's recent round of layoffs have had an effect worldwide, including India. According to a report by Economic Times, hundreds of Indian workers from shared services, backend teams and retail operations could face being let go from their positions. As its core businesses experience slowing growth, this company is taking measures to cut costs in response. Unfortunately, such cost-cutting could open the door for increased competition from local players. The Impact on Employee Morale Are You Working at a Large Tech Company and Just Heard about Layoffs? Hearing news of layoffs can be like receiving an emotional blow, as colleagues start leaving your chair as they find new employment. This experience can leave employees feeling depressed, discouraged and downtrodden - leading to low morale which in turn has an adverse impact on culture and employee engagement in your workplace. Reasons why businesses make decisions to lay off employees can vary widely, but generally speaking it comes down to finances. A company may decide that a particular project won't be profitable or reduce costs due to an economic downturn, as well as needing to reduce its headcount due to overstaffing issues. A voluntary severance program can assist companies in making these difficult decisions without negatively affecting employee morale. But being laid off can be hard to accept, and can have lasting repercussions for your career. According to research, one layoff can lead to an increase of 31% employee turnover the following year due to lost control and uncertainty regarding housing or healthcare benefits. Mass layoffs have an adverse impact on employee morale as well as company reputation, which can be particularly difficult for start-ups still building their brand in the market. Furthermore, mass layoffs may prove disastrous to tech titans already grappling with economic obstacles. Meta, Twitter and Amazon are just a few of the renowned tech companies who have seen their stock prices decline drastically over recent months. Furthermore, several banks which specialise in providing funding to tech startups have had to shut down due to solvency concerns. Mass layoffs have an enormous ripple effect throughout the tech industry. While it is critical for businesses to do what is necessary in order to stay competitive, it is also vital that they maintain positive culture and morale for remaining employees by conducting compassionate layoffs while communicating openly about what is occurring. The Impact on the Company’s Competitiveness The tech industry is facing difficult times, with giants like Google and Twitter dismissing thousands of workers while traditional IT firms such as Wipro have reduced salaries for newly hired IT employees while cutting hiring targets. Layoffs are taking their toll, with some employees already on the job market being unable to secure another position due to low skill demand. Given Amazon's slowdown, it should come as no surprise that they would seek to reduce expenses by laying off workers. Indeed, this practice is widespread within the tech sector as businesses attempt to restructure operations to reflect new business goals. Amazon has already frozen hiring, scrapped experimental projects, slowed warehouse expansion and laid off workers in both advertising and AWS departments - practices all seen as necessary during times of economic hardship. These restructuring measures are taken to increase a company's competitiveness and profitability; however, this comes at the price of losing talented employees who may experience reduced job security as part of this restructuring. Furthermore, any layoffs will have immediate and long-term ramifications on morale within the workforce and could potentially have lasting repercussions for company expansion plans. Amazon has also experienced layoffs due to intense competition in India from rival e-commerce platforms like Walmart's Flipkart, as it struggles to establish itself in smaller towns and cities. Furthermore, there has been pressure from Indian authorities for them to improve their tax collection practices which may result in higher prices for customers. Amazon has also accrued substantial debt and is finding repayment difficult, straining their balance sheet and prompting it to reduce investments in new technologies and lay off employees - both results of global economic turbulence and Amazon's struggle to remain competitive in an increasingly challenging marketplace. Amazon's retrenchment drive will not only have an adverse impact on employees but will also impact customers, with delivery times potentially increasing and customer service requests taking longer to be answered. Over time, this may damage both profitability and reputation of the company. The Impact on the Indian Economy Amazon's recent mass layoffs have had a direct impact in India, prompting many from the technology sector to fear unemployment. Yet experts remain confident that India can weather this storm and remain an economic powerhouse. Early this month, NITES (Nascent Information Technology Employees Senate), Amazon India's workers' union, filed a formal grievance with local labor authorities regarding its Voluntary Separation Policy (VSP). As stated by president Harpreet Singh Saluja of NITES India, any company seeking to lay off employees must submit an application with reasons and submit this to relevant government authorities prior to initiating VSP, yet Amazon did not submit this paperwork prior to initiating its policy - something NITES considers a clear violation of labor laws and labor regulations. Amazon CEO Andy Jassy informed employees in his note to staff that due to an unpredictable economic environment, some employees would be let go and cost savings measures put in place in order to build long-term plans for business success. Sources indicate that Amazon India will lay off more than 10,000 employees as part of their current restructuring initiative, including roles within Amazon Stores and PXT organizations. Furthermore, this restructuring may see seller onboarding functions discontinued in tier-2 cities as part of this restructuring plan. Potentially, the company could also reduce personnel in customer care and seller services roles; however, this has yet to be confirmed. With their annual planning process extending well into the coming year, additional reductions may occur in future years. Additionally, affected employees may be offered buyout packages which include lump sum severance payments, temporary health insurance benefits and help finding a new job. The long-term effects of Amazon's latest layoffs in India depend on how quickly India recovers from global turmoil and how fast Amazon can grow their business; should things fail to improve quickly then more layoffs could follow in 2023. The Impact on the Indian E-commerce Industry Amazon India is cutting jobs as part of their global retrenchment exercise. Amazon will be eliminating over 18,000 roles globally; with roughly 1,000 being eliminated here. Amazon India plans on cutting positions from both its Devices & Books Business as well as People Experience Technology (PXT). As per an internal memo from the leadership team, affected employees will receive a VSP package consisting of an initial lump-sum severance payment equal to 22 weeks of base pay; one week base pay every six months (up to a maximum benefit of 20 weeks paid severance); medical insurance coverage for six months and either notice periods or pay in lieu. Retrenchments at Snapdeal are having a drastic effect on both their workforce and on India's e-commerce industry as a whole. According to reports, several sellers have left Snapdeal in order to avoid higher fees; some even transferred inventory onto rival marketplaces causing huge uncertainty within the industry and slowing its sales growth. Amazon has made substantial investments in India, but their recent mass layoffs have caused many local companies to question its commitment to India's market - especially small businesses competing against Amazon in niche verticals like food delivery or e-learning platforms. Though Amazon's layoffs may cause short-term anxiety, they are necessary to maintaining its competitive edge in India's e-commerce market. By streamlining operations, cutting costs, and focusing on its core businesses more directly - not to mention giving smaller Indian e-commerce players an opportunity to gain ground and grow market share - Amazon hopes these moves will enable it to maintain its position at the top. Covid is following in the footsteps of other major tech firms by trimming its workforce following a decline in online shopping sales attributed to Covid and growing concerns of global economic slowdown. However, its decision not to reduce workforce is more related to shifting business priorities and increased competition from local players; as evidenced by an existing reduction of staff in offline retail spaces while shifting more resources toward digital initiatives.