Amazon plans to lay off about 10,000 workers, according to a report of New York Times Posted this Monday. The layoffs, which could come as early as this week, will hit the division dedicated to making gadgets, such as the Alexa voice assistant, as well as the sales and human resources departments. It is the largest workforce adjustment in the history of the company, 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 distributed throughout the world, most of them, a workforce temporarily hired in warehouses or dedicated to logistics tasks. The adjustment comes at one of the critical moments of Amazon’s workload, with the gift season – which begins in the United States with Thanksgiving, continues with the consumerist avalanche of Black Friday offers and ends at Christmas – at the doors . This year’s shopping spree looks bleaker than usual, due to inflation and the gloomy omens of the global economy.
Amazon is the latest tech company to announce massive layoffs, following Meta (Facebook), which last week confirmed its plans to get rid of 11,000 of its employees (13%) and Twitter. After buying it for 44,000 million dollars, Elon Musk left half of the social network’s staff on the street a few days later, about 3,700 people in total.
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 (from 798,000 employees to end of 2019 to 1.6 million on December 31, 2021) and increased investment in new developments.
The customs acquired during this exceptional time did not prove to be as lasting as analysts had predicted. At the beginning of 2022, the company’s growth was at the lowest rate in two decades. The company had to pay for past excesses, and faced high costs from overinvestment and overly optimistic expansion. That perfect storm caused revenue to fall in the third quarter of the year. Also, that the company’s capitalization fell for the first time since April 2020 below one billion dollars. Amazon shares have plunged 41% so far this year and are on track for their worst year since 2008.
The layoffs come at a dismal time for the tech sector, which has experienced an unprecedented hiring spree that has left behind a season of wild job cuts.
To the employees that Twitter and Meta sent to the unemployment line, 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), Uber’s rival Lyft (700) or the e-commerce payment platform Stripe (about a thousand). Microsoft and Intel are carrying out, for their part, cuts in the workforce of hundreds of workers. Apple and Alphabet (Google) are also trying to contain their personnel costs by reducing the pace of hiring as a first step.
The news of Amazon’s work plans has come on the same day that CNN published an interview with its founder, Jeff Bezos, in which he announced his intention to donate “the majority” of his net worth to charity for charitable purposes. 124,000 million dollars (120,000 million euros). Bezos is currently, according to the fickle Bloomberg ranking, the fourth richest man in the world. The list is headed by Musk.
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