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Amazon is cutting another 9,000 employees, in addition to their earlier cuts that affected over 18,000 staffers. CEO Andy Jassy says they are making a "very difficult decision," but one that is best for the company's long-term growth prospects.
Amazon's cloud computing, human resources, advertising and Twitch live-streaming businesses will be hit the hardest by these latest layoffs; they will be finalized in mid-April and notified to employees.
Amazon has announced the addition of 9000 more job cuts to the 18,000 already made in January as it struggles with slowing online commerce and declining ad revenues. These layoffs will impact staff in its cloud computing, advertising and Twitch units.
At the end of December, this company, which employed 1.54 million people worldwide, had to cut spending due to a slowdown in sales and profits. It has temporarily stopped construction on its proposed second headquarters, scrapped plans to expand warehouse operations, and discontinued some experimental projects that did not offer quick financial gains.
On Monday, CEO Andy Jassy sent a memo to staff announcing they had completed their annual planning process and planned to let go of 9,000 employees across AWS, PXT, advertising and Twitch. Jassy noted the fresh cuts would take place within the coming weeks.
He noted that the decision to cut employees wasn't taken lightly, but he believed it was the right one for the company. They had been working to prioritize spending on their most critical businesses and "to secure our long-term viability," he wrote in a memo.
Since the pandemic, Amazon's retail business was severely hit. Millions of Americans turned to them for food, clothing and other essential items to stay healthy. Jassy has since scaled back warehouse operations and put off building the largest phase of its second headquarters near Washington D.C.
Tech companies have been slowly but surely reducing their workforces for months, as a series of job cuts has followed pandemic-induced hiring sprees that left them overstaffed. Last week, Meta at Facebook announced another round of layoffs; Microsoft and Alphabet followed suit by eliminating thousands of positions as well.
Amazon plans to make 9,000 cuts, impacting about 3 percent of their corporate staff. Most of these job losses will occur within high-margin divisions such as cloud computing (which has higher margins than core retail operations) and advertising, which has become one of the company's most profitable operations.
Amazon announced Monday in a memo to staff that the company is further cutting 9,000 workers, in addition to earlier reductions that began last November and continued into January. These latest cuts will primarily impact Amazon's cloud computing, advertising, human resources and Twitch live-streaming businesses, Jassy wrote.
The move comes as the company experiences slower online commerce growth and is grappling with the effects of declining ad revenue across the tech industry. Its cloud business, which accounted for a third of its operating profit in the fourth quarter, was a major contributor to that decrease.
Amazon has also put on hold or postponed plans to expand their warehouse operations as part of a cost-cutting measure. This move had been expected to bring 25,000 jobs into the region and serve as an impetus for economic development in the area.
Jassy's cost-cutting measures have also hindered Amazon's expansion of their own stores, which they now sell through Amazon Fresh and Amazon Go. This move, coupled with a decline in advertising revenues, have been the primary causes of their declining operating margins.
Retail division of Walmart has been struggling to stay ahead of competition from rivals like Target, leading to a drop in site traffic.
However, it has managed to maintain its overall sales growth by expanding into new markets such as music streaming services. Furthermore, the company is striving to reduce costs, such as by decreasing employee benefits offered.
The company's retail unit employs more than 1.54 million personnel worldwide, including hourly workers who pack and ship products in warehouses. However, the bulk of its workforce consists of a few dozen hourly employees employed in shipping and delivery operations - accounting for 98 percent of its total workforce.
Amazon wasn't the only tech company to announce mass layoffs of employees in November, but other Big Tech firms have followed suit and reduced their staffs as the market has slowed. Meta Platforms - owned by Facebook - announced 10,000 job cuts last month while Alphabet (GOOG, GOOGL) and Microsoft (MSFT) followed suit with staff reductions as well.
Amazon announced Monday that it plans to cut an additional 9000 workers, in addition to the 18,000 cut in November and January. These changes are primarily affecting Amazon's cloud computing, human resources, advertising, and Twitch livestreaming businesses.
The move comes as the e-commerce giant struggles with slower growth, especially in its core retail business. Its most recent earnings report showed revenues had increased slightly from a year earlier, largely due to an increase in advertising revenue.
Amazon's lucrative cloud computing division experienced slow sales in the fourth quarter, and last month the company warned that operating profit may continue to decline as consumers and cloud customers cut spending.
Jassy wrote in a memo to employees that Amazon "opted to be more efficient with our costs and headcount" due to the "uncertain economy." While cutting 9,000 positions was "a difficult decision," Jassy wrote, the company believes it is in their best interests long-term.
He noted that it was still uncertain which teams would be affected by the layoffs, but hoped to have final decisions made by mid to late April. Affected employees will receive severance pay and external job placement support, according to his memo.
Workers at Amazon Web Services (AWS), its cloud computing unit, and People Experience and Technology Solutions (PXT) organization will all be affected. Furthermore, Twitch livestreaming service will experience some reductions, as will several other divisions within the company.
Jassy explained that the company's planned layoffs are part of its annual budgeting process. During this stage, they aim to become leaner while still investing in long-term customer experiences.
At the end of last year, the company employed 1.54 million personnel - a 4 percent decrease from one year prior. Most of these employees are hourly workers who pack and ship products from its warehouses.
Amazon CEO Andy Jassy recently revealed that the e-commerce giant will eliminate 9000 more jobs, in addition to the 18,000 job cuts announced earlier this year. These reductions mainly impact Amazon's cloud computing, advertising and Twitch live streaming divisions.
This announcement comes amid a tech slump and declining advertising revenue that are impacting many of its peers. Google, Facebook, and Twitter have all recently reduced staff numbers, citing decreased ad revenue as the primary cause.
It's a challenging time to be in the tech industry, particularly one that must compete with retail giants like Walmart and Target. Amazon faces an especially formidable obstacle: many of its rivals offer better deals on products than they can.
Amazon has had to reduce costs in order to make up the difference, particularly on high-margin items like software and hardware. As a result, they have had no choice but to reduce prices in order to break even.
One of the most cost-effective and efficient ways it's doing this is through its AWS division. This group provides customers with the quickest, cheapest way to purchase goods online - saving competitors over $3 billion since 2009. Furthermore, these savings have been put towards investing in new cloud-based services and devices which should launch shortly. It has taken a long time for this effort but one that will likely pay off for the company in the future.