Last week, Amazon announced they would lay off as many as 10,000 employees in a round of layoffs. These layoffs would mainly affect full-time workers in both corporate and technology sectors. The layoffs make up 3% of Amazon’s total workforce. Amazon is offering severance packages to separated employees. They include subscription payments, transitional health insurance benefits, and external job placement.
Prior to the layoffs, Amazon said they were pausing hiring in their corporate workforce, according to GeekWire. At the time, it was unclear how long that pause would be, but it would last a “few months.” They have also paused hiring within their retail businesses.
CEO comments on layoffs
In a November 17, 2022 memo to employees, which was also posted to the company’s news page, Amazon CEO Andy Jassy said that the company has “hired rapidly” in recent years, but the economy is challenging for Amazon, reports Engadget.
“Yesterday, we communicated the difficult decision to eliminate a number of positions across our Devices and Books businesses, and also announced a voluntary reduction offer for some employees in our People, Experience and Technology (PXT) organization. Our annual planning process extends into the new year, which means there will be more role reductions as leaders continue to make adjustments,” said Jassy.
“Those decisions will be shared with impacted employees and organizations early in 2023. We haven’t concluded yet exactly how many other roles will be impacted (we know that there will be reductions in our Stores and PXT organizations), but each leader will communicate to their respective teams when we have details nailed down,” Jassy said.
Amazon’s previous reductions are still in line with Amazon’s previously stated strategy. In March of this year, they closed 68 brick-and-mortar stores to focus on groceries and fashion. Employees affected during that transition were either shifted to new roles within the company, or granted severance pay.
In their Devices business, Amazon is also making cuts. They are consolidating the team that currently works on Alexa. This could also signify that areas like Luna, their cloud gaming service launched in 2020, could also be a target. Devices and Services have lost $5 billion in annual revenue, TechCrunch reported, which explains the need to slash expenses.
“After a deep set of reviews, we recently decided to consolidate some teams and programs. One of the consequences of these decisions is that some roles will no longer be required. It pains me to have to deliver this news as we know we will lose talented Amazonians from the Devices & Services org as a result. I am incredibly proud of the team we have built and to see even one valued team member leave is never an outcome any of us want,” an internal memo to the Devices team said.
Employees are also being offered a buyout program for those that may want to leave the company, but who are still weighing their options. Amazon is offering employees a week’s pay for every six months the employee has been with the company. Additionally, Amazon will grant their employees access to the company’s health insurance until the end of December, according to Entrepreneur. Employees will have until November 29 to decide to accept this offer and can reverse it until December 5. The last day for employees voluntarily separating from Amazon would be December 23.
It is unclear how many employees will be laid off from the company entirely. Decisions are being made within each division of the company, so 10,000 is not a finite number, shared Geekwire. Amazon does not distinctly have to cut 10,000 employees and that will be over. Layoffs from Amp, their radio app, started making staff cuts in October, according to a separate post from Geekwire.
Most difficult decision since becoming CEO
In his memo to staff, Jassy, who has only been the company’s CEO for about 18 months, said this was the most difficult decision they’ve had to make in that period of time.
“Amazon has weathered uncertainty and difficult economies in the past, and we will continue to do so. We have big opportunities ahead, both in our more established businesses like Stores, Advertising, and AWS, but also in our newer initiatives that we’ve been working on for a number of years and have conviction in pursuing (e.g. Prime Video, Alexa, Kuiper, Zoox, and Healthcare),” Jassy concluded. “The key will be to do what Amazon does best – obsess over customers and invent relentlessly on their behalf – and if we do that, we should all be very optimistic about Amazon’s future. I know I am.”
The last few years have been tough on all of us, even the largest of companies. In Amazon’s case, the pandemic presented the company with the opportunity to expand staff and capacity. Now that we have adapted to the pandemic in its changing form, companies like Amazon, Microsoft and Meta are “right-sizing” their operations. The financial piece is tough for companies because they have to ensure they maintain operations and remain financially sustainable but, at the end of every pink slip, there stands a person who will lose their livelihood. We encourage all subscription companies to be transparent about their operational challenges and to keep their employees in mind as their companies shift priorities to address an ever-evolving economy.