Amazon plans to lay off up to 20,000 employees companywide over the next few months, including fulfillment center workers, technology staff and corporate executives, about double what was previously reported, as the retail and computing giant in the cloud it retires. after a wave of hiring during the pandemic.

Amazon employees are classified from Tier 1 to Tier 7, and staff at all levels are likely to be affected, according to sources with direct knowledge of the matter, who spoke on condition of anonymity. The New York Times first reported in mid-November that Amazon would carry out mass layoffs, citing sources that up to 10.000 people would be laid off.

However, company bosses have been told in recent days that they should try to identify job performance problems among employees, as part of an effort to lay off some 20,000 people, the sources say. Twenty thousand employees equals approximately 6% of the company's workforce and approximately 1,3% of Amazon's 1,5 million employees, including global fulfillment center and hourly workers.

Company staff have been informed that employees will receive 24-hour notice and severance pay, in accordance with their company contracts. “There is a sense of fear among the company's employees when the news broke,” said a source who was briefed directly on the layoff effort. The layoffs would be the largest downsizing in the company's history.

“There is no mention of a specific department or location for the cuts, it is for the entire company. We were told this was due to over-hiring during the pandemic and the need to cut costs as the company's finances were on a downward trend," the executive said. said the source.

Following the New York Times story, Amazon CEO Andy Jassy on November 17 in a public message to employees confirmed that layoffs were underway, but did not specify the expected number of employees that would be laid off.

“Our annual planning process runs into the new year, which means there will be further role reductions as leaders continue to make adjustments. These decisions will be shared with affected employees and organizations in early 2023," Jassy wrote in the post, noting that the company had previously announced layoffs in the Devices and Books businesses, and would extend a voluntary retrenchment offer to some employees at the organization People, Experience and Technology (PXT). Meanwhile, sources have confirmed that employees of the company's robotics team have been laid off.

In response to a question, an Amazon spokesperson did not comment on reports from sources that the company plans to lay off 20,000 employees, instead pointing to a passage from Jassy's Nov. 17 post that read: "We have not yet determined exactly how many other roles will be affected (we know there will be reductions in our PXT stores and organizations), but each leader will reach out to their respective teams when we have the details.

Amazon needs to cut costs, says CEO Jassy

Jassy explained the layoffs Wednesday during an interview at the New York Times DealBook conference, saying, "We felt like we had to optimize our costs."

Amazon's retail business grew rapidly at the start of the pandemic, which "forced us to make decisions at the time to spend much more money and go much faster building infrastructure than we ever imagined," Jassy said at the conference. .

“We knew we were in danger of building too much,” Jassy said.

While business IT spending is expected to rise further over the next year, the forecast has not been strong enough to allay concerns among tech industry giants, especially those with large retail businesses. During a time of rising interest rates, the war in Ukraine, high fuel costs, supply chain woes and declining sales of personal PCs, many tech giants have announced layoffs in recent months.

At Amazon, even its most profitable cloud business and services division, Amazon Web Services (AWS), is showing signs of slowing growth since the start of this fiscal year, reporting year-over-year revenue growth of 27,5% for the finished quarter. September compared to year-on-year growth of 33% and 36,5% in the previous two quarters, respectively.

During his third-quarter earnings conference call with analysts, Amazon Chief Financial Officer Brian Olsavsky attributed the slowdown in growth to macroeconomic conditions that forced Amazon customers to cut spending to save money in the short term.

Copyright © 2022 IDG Communications, Inc.

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