Amazon follows the trend of the technology sector and will lay off thousands of people

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Amazon began its wave of layoffs this Wednesday and notified that the company would have to make savings. According to the US press, the online sales giant could be preparing around 10,000 layoffs, after having hired hundreds of thousands of people in 2021. The company suffers from the current difficulties in the technology sector. Meta and Twitter recently announced massive layoffs.

Amazon announced on Wednesday, November 16, that it would lay off about 260 workers and that those job cuts would take effect on January 17. A letter was sent to their employees announcing layoffs in the devices and services unit. Although Amazon did not want to specify how many cuts may be underway, according to ‘The New York Times’, around 10,000 jobs are expected to be cut.

Employees working for the Alexa voice assistant or the Amazon Luna cloud gaming platform said Tuesday on LinkedIn that they were fired.

“We continue to face an unusual and uncertain macroeconomic environment,” said head of hardware Dave Limp, adding, “in light of this, we have been working over the past few months to further prioritize what matters most to our customers and the business. “.

According to Limp, the company will work with those who were laid off to “provide support” and find them new roles. The company will also give severance pay.

Amazon founder Jeff Bezos speaks during an event on Blue Origin’s space exploration plans in Washington, the United States, on May 9, 2019. © REUTERS/Clodagh Kilcoyne

From mass hiring to mass layoffs

This wave of layoffs represents a drastic change for the company founded by Jeff Bezos and known for its job creation. Its workforce doubled between the end of 2019 and the end of 2021, from 800,000 to 1.6 million employees. Amazon has workers all over the world, who work mainly on an hourly basis, and is the world’s second-biggest employer, behind US giant Walmart.

During the Covid-19 pandemic, the company made massive profits by providing homebound people with product sales online. But when people returned to their usual pace of life, income growth slowed.

This year, Amazon posted significant losses, and while it returned to profitability in the third quarter, investors were bearish on weaker-than-expected revenue.

Revenue growth is forecast to be no more than 8% for the rest of the year, up from a 38% increase two years ago and that as the Christmas period approaches. The online retail giant’s stock is down 42% since January.

“As we’ve been through this, given the current macroeconomic environment (as well as several years of fast-hire), some teams are making adjustments, which in some cases means that certain roles are no longer needed,” the spokeswoman for the organization said. company Kelly Nantel in a statement.

A package is transported by conveyor belts inside Amazon's JFK8 distribution center in Staten Island, New York, the United States, November 25, 2020.
A package is transported by conveyor belts inside Amazon’s JFK8 distribution center in Staten Island, New York, the United States, November 25, 2020. © REUTERS/Brendan

A technological sector in difficulty

What Amazon is experiencing can be compared to the wave of cuts and layoffs at Meta, the parent company of Facebook and Twitter, although those of Amazon are comparably fewer. Meta said last week that it would lay off 11,000 people, or around 13% of its workforce. As for Elon Musk, the new owner of Twitter, he cut the company’s workforce in half this month, firing 3,750 of its 7,500 employees via email.

Other companies in the sector suffer the same difficulties. The car-sharing company Lyft said it would cut 13% of its employees and Stripe, a payment processing platform, said it would cut 14% of its employees.

According to Wedbush Securities analyst Daniel Ives, “the clock has struck midnight in terms of hypergrowth for Big Tech,” adding, “these companies hired at such an eye-popping rate that it wasn’t sustainable, now there are some painful steps ahead.” .

Among the causes of such difficulties, the risk of economic recession combined with inflation and market instability, forcing investors to be prudent.

With EFE, Reuters and AP

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Amazon follows the trend of the technology sector and will lay off thousands of people