Amazon axes 18,000 staff in tech jobs bloodbath

Amazon is cutting more than 18,000 jobs as it becomes the latest tech giant to cut staff amid economic turmoil and fragile investor confidence.

Boss Andy Jassy told employees the biggest cull in its history was needed after rampant hiring amid the pandemic.

‘Companies that last a long time go through different phases. They’re not in heavy-duty expansion mode every year,” Jassy said. “This year’s assessment was more difficult given the uncertain economy and the fact that we have hired people quickly in recent years.”

The news sparked fears about jobs in the UK, which is home to about 70,000 of Amazon’s 1.5 million global employees.

The cuts were announced just hours after workers at the Coventry warehouse set a date for the first strike by Amazon workers in the UK, halting parcel distribution before the end of this month.

The GMB union said the workers taking action on wages will make history on January 25.

But few were shocked by the cuts, which affect several teams across Europe and have become common in Silicon Valley. 2

According to tracking site Layoffs.fyi, the tech industry will lay off more than 150,000 workers by 2022, and the trend shows no sign of abating.

This week, Salesforce said it would cut about 10 percent of its workforce, or 8,000 jobs, citing similar pandemic-induced woes as its San Francisco-based neighbors.

The software giant joined a list of companies saying they hired too many people during the pandemic and then underperformed.

“As our revenue accelerated due to the pandemic, we overhired, leading to this economic downturn we are now facing, and I take responsibility for that,” CEO Marc Benioff told staff.

So, with the IMF predicting that a third of the global economy will slip into recession this year, companies will continue to push for leaner projects and even tighter budgets to get through the rough patch.

Hargreaves Lansdown investment analyst Susannah Streeter estimates that the hardest hit companies are likely to be those whose successes are more inextricably linked to advertising.

Marketing insight firm WARC says that while ad spend will grow, it will be much slower, with more companies fighting for less money.

Combined with the rise of Chinese social media powerhouse TikTok, which has more than 1 billion users, it’s a recipe for disaster for the likes of Facebook owner Meta and Snapchat.

Both have cleared 11 percent and 20 percent of their respective workforces to prepare for the tough ride ahead.

Facebook owner Mark Zuckerberg apologized to staff in November for his decision making, stating that increased competition had caused revenues to be much lower than expected. “I’m wrong,” he wrote.

The flip side, Streeter explained, is that this rocky period will subside as inflation slows and interest rates plateau later this year.

Until then, she says, companies must go through a “format change process.” “During the pandemic, tech companies had to meet demand for staffing, but now they are trying to establish a team size that is just right,” she said.

Large numbers of employees have been laid off at some companies, such as Elon Musk’s Twitter. But the layoffs are a drop in the ocean for Amazon’s military.

Dan Ives, an analyst at investment firm Wedbush, said, “These techies need to pull the bandaid off and cut headcount and costs as the first step to properly sizing their business model.”

Shares of Meta, which also owns WhatsApp and Instagram, are up 25 percent since news that as many as 600 employees could move to the UK.

While Apple and Google parent company Alphabet appear to have survived without layoffs, the pressure is mounting — the iPhone maker slipped out of the $2 trillion club this week due to manufacturing problems.

Both Amazon and Salesforce were lifted following their news, helping to reverse their declines of 48 percent and 38 percent, respectively, over the past year.

AJ Bell analyst Russ Mold said Amazon’s withdrawal from experiments such as brick-and-mortar stores would allow it to go back to basics with its focus on e-commerce and cloud.

“The news was pleasing to shareholders, who will appreciate any efficiencies that can increase their share of the returns generated by the company,” he said.

The feeling is one of redemption, with big tech trying to recoup losses and change direction that pleases investors but may mean cutting staff.