Amazon Announces Plans to Cut Over 18,000 Positions

Amazon.com Inc. is cutting more than 18,000 jobs — its biggest reduction ever — as the tech industry slump deepens.

Andy Jassy, Amazon's CEO, announced Wednesday that the company would be cutting 1% of its workforce. Jassy said that the decision was made as part of Amazon's annual planning process.

The layoffs began last year and were previously expected to affect about 10,000 people. The cuts are concentrated in the firm’s corporate ranks, mostly Amazon’s retail division and human resources functions, like recruiting.

"Amazon has always been able to weather difficult economic times, and we will continue to do so," Jassy said. "These changes will help us pursue our long-term opportunities with a stronger cost structure."

Although Amazon has been facing the possibility of layoffs for months - the company has admitted to hiring too many people during the pandemic - the increasing number of layoffs suggests that the company's outlook has become more pessimistic. Amazon joins other tech giants who are making major cuts - on Wednesday, Salesforce Inc. announced plans to eliminate around 10% of its workforce and reduce its real estate holdings.

Investors reacted positively to Amazon's latest cost-cutting efforts, betting that it could boost profits at the e-commerce company. The shares climbed about 1.8% in trading before New York exchanges opened on Thursday. The Wall Street Journal first reported on the plan.

Amazon is set to cut 18,000 workers, the biggest such reduction by a tech company during the current slowdown. However, Amazon's workforce is far bigger than that of its Silicon Valley peers, with more than 1.5 million employees as of the end of September.

At the time of the cuts, Amazon had around 350,000 corporate employees worldwide. A spokesperson said that the company was planning the cuts in November.

At the end of last year, the world's largest online retailer saw a sharp slowdown in e-commerce growth as shoppers returned to pre-pandemic habits. In response, Amazon delayed warehouse openings and halted hiring in its retail group. The company then broadened the freeze to its corporate staff and began making cuts.

Jassy has eliminated or curtailed experimental and unprofitable businesses, including teams working on a telehealth service, a delivery robot, and a kids’ video-calling device.

The company is also trying to align its excess capacity with cooling demand. One effort includes trying to sell excess space on its cargo planes, according to people familiar with the matter.

Amazon, which started out as an online bookstore, is now seeing some of its businesses level off. However, it is still investing in its cloud-computing and advertising businesses, as well as video streaming.

The first round of layoffs hit Amazon's Devices and Services group the hardest. This group is responsible for building the Alexa digital assistant and Echo smart speaker, among other products. The group's chief told Bloomberg last month that the layoffs totaled less than 2,000 people, but that Amazon remains committed to the voice assistant.

Some recruiters and employees in the company's human resources group were offered buyouts. Jassy told employees in November that more cuts would come in 2023, affecting its retail and HR teams.

In a memo on Wednesday, Jassy said that the company would provide severance, transitional health benefits, and job placement to affected workers. He also criticized an employee for leaking the news, an apparent reference to the Wall Street Journal report. Jassy said that the company plans to begin discussing the moves with affected employees on January 18.

Jassy noted that companies that have longevity tend to go through different phases, and that they are not in a constant state of expanding their workforce every year.