World news

Why Amazon continues to massively cut jobs

This is another major sign of the difficulties of the technology sector in the United States. The e-commerce giant Amazon announced on Wednesday January 5 that it was going to cut “just over 18,000” jobs, including in Europe.

Amazon CEO Andy Jassy shared the news in a message to employees, also published on the company’s website, stating that the stores operated by the group and human resources would be mainly affected. As early as November, several American media had reported that the American company was planning to lay off around 10,000 employees. Amazon had confirmed job cuts without saying how many positions would be affected.

“We have hired massively over the past few years”

In his post on Wednesday, Andy Jassy said he chose to break the news about the number of cuts “earlier” than expected after it was leaked by an employee. The manager mentions that the employees concerned “or their representatives, if necessary, in Europe” would be contacted by the company from January 18. “The review of our annual planning (….) has been more difficult this year given the economic uncertainty and the fact that we have hired massively over the past few years,” says Andy Jassy.

The distribution group has indeed recruited with a vengeance during the pandemic to meet the explosion in demand, doubling its global staff between the beginning of 2020 and the beginning of 2022.

At the end of September, the group had 1.54 million employees worldwide, not including seasonal workers recruited during periods of increased activity, particularly during the holiday season. “Amazon has withstood uncertain and difficult economic situations in the past, and we will continue to do so”, assures the boss of the American group.

“These changes will help us pursue our long-term opportunities with a stronger cost structure (…) Companies that last for a long time go through different phases. They are not in a mode of massive staff expansion every year” , he continues.

Serial layoffs in tech

This job cut plan is the largest among recent announcements of workforce reductions affecting the technology sector in the United States. It is also the largest staff reduction in the history of the Seattle (Washington) company. “While the scale of Amazon’s layoffs may be shocking, they must be seen in the context of the massive expansion the company has embarked on over the past five years,” said Neil Saunders of GlobalData. “All of this activity was based on the mistaken assumption that sales of Amazon products and services would continue to grow at a healthy pace,” the analyst added.

In a generally more difficult context for technology companies, Amazon saw its net profit fall by 9% over one year in the third quarter of 2022. For the last quarter, the group anticipated anemic growth by its standards, of between 2 % and 8% year on year, and operating profit between 0 and 4 billion dollars, compared to 3.5 for the same period of 2021.

Amazon is due to announce its annual results on February 1.

In the tech sector, several large platforms with an advertising-based business model are facing budget cuts from advertisers, who are reducing their expenses in the face of inflation and rising interest rates.

Meta, the parent company of Facebook, announced in November the loss of 11,000 jobs, or about 13% of its workforce.

At the end of August, Snapchat cut about 20% of its workforce, or more than 1,200 employees. Twitter, bought in October by Elon Musk, for its part fired about half of its 7,500 employees.

The latest, the American IT group Salesforce, specializing in management solutions and in the cloud (remote computing), announced on Wednesday that it was laying off around 10% of its employees, or just under 8,000 jobs.

Source : WORLD NEWS

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