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Amazon sees layoffs from its most profitable division

By Jimmy Adeel
|
April 27, 2023

Amazon, the e-commerce giant, has started notifying employees affected by the company's largest job cuts in its nearly 30-year history, reports Daily Mail.

The company has initiated eliminating 9,000 jobs in human resources and its most profitable sector, cloud computing, through Amazon Web Services (AWS).

Layoffs Despite Profitability

Despite AWS generating $23 billion in profits last year and experiencing explosive growth during the COVID-19 pandemic, Amazon has decided to pare back staff numbers. 

This move follows the earlier wave of layoffs, totaling about 18,000 job cuts, which the company completed earlier this year.

Amazon Web Services CEO Adam Selipsky and Beth Galetti, the senior vice president of People Experience and Technology, informed colleagues that the layoff notifications began in the US, Canada, and Costa Rica. 

Selipsky acknowledged the impact on affected employees and their families, stating that the company is working hard to treat everyone respectfully and provide resources to aid in the transition.

In the message to employees, Selipsky wrote, “It is a tough day across our organization. I fully realize the impact on every person and family who is affected.” He added, “We are working hard to treat everyone impacted with respect, and to provide a number of resources and touchpoints to aid in this transition.”

Identifying Top Priorities

Selipsky stated in his memo that AWS' rapid growth and the overall business climate require identifying and prioritizing resources for top priorities that matter most to customers. 

He also noted that while some team members would be shifted to other projects or initiatives, others would be subject to role eliminations.

Galetti also cited company-wide decisions to prioritize what matters most to customers and the long-term health of the businesses. 

Amazon CEO Andy Jassy announced the latest round of layoffs in a company-wide memo last month, stating that the second phase of the company's annual planning process had led to the decision to make additional job cuts. However, Amazon will still hire in some strategic areas.

Impact on Amazon’s Financial Results

Amazon is scheduled to report its financial results on Thursday. Investors will be watching closely to see if the cost-cutting measures have helped profitability and if cloud services sales growth is declining.

The earlier round of layoffs affected Amazon's store division, which includes its e-commerce business, brick-and-mortar stores like Amazon Fresh and Amazon Go, and other departments such as the one that runs the virtual assistant Alexa. 

Last month, the company also paused construction on its headquarters building in northern Virginia.

Tech Giants Cutting Jobs

Amazon is not alone in reducing its headcount. Other tech giants have also announced job cuts, including Meta Platforms Inc., Google parent company Alphabet, Microsoft, Dell Technologies, and International Business Machines. 

During the pandemic, Amazon and other tech companies ramped up hiring to meet surging demand as aspects of daily life shifted online. 

However, many companies have slashed costs in response as consumer habits return to normal and the economy slows.