Amazon CEO Kevin Jassy said yesterday that the company will lay off 9,000 more employees, on top of the 18,000 layoffs already announced and implemented.
The new layoffs will affect than 3 percent of Amazon's corporate work force.
The parts of the company that will be hardest hit, Jassy said, are Amazon Web Services (AWS), People, Experience and Technology (PXT), advertising, and Twitch, Amazon's livestreaming and gaming service. In addition, Jassy made clear that the cutting may not be done, that some teams have not completed the analyses necessary to make final decisions.
The New York Times observes that "the new layoffs, which amount to roughly 3 percent of its corporate work force, will target workers in some of Amazon’s most profitable divisions, which had previously been spared, including Amazon’s cloud computing business and advertising operations. Those two segments of the business are much higher-margin operations than Amazon’s core retail business, according to financial analysts and filings."
TechCrunch expands upon this: "On the surface, one of the biggest surprises here is that Amazon’s perennial cash cow AWS has been hit by the layoffs. But while AWS remains in relatively rude health, its growth trajectory of late has not been as precipitous as years gone by, which is reflective of a broader slowdown in cloud infrastructure spending. Put simply, companies are looking to cut costs due to the economic downturn, which translates into fewer dollars spent on things like cloud computing — even though AWS remains a hugely profitable entity for Amazon."
The Puget Sound Business Journal reports that "the timing is sowing frustration among employees, according to messages on an internal Slack channel viewed by the Business Journal. Last week, Amazon said in a FAQ that it expects employees to relocate to the offices they're assigned to before May 1. The requirement could mean employees having to relocate without yet knowing their job status, workers said."
The Wall Street Journal notes that "waves of job cuts have roiled the tech industry. Amazon is the latest company to enact more job cuts than previously expected. Last week, Facebook parent Meta Platforms Inc. said it would cut roughly 10,000 jobs over the coming months, its second wave of mass layoffs."
Here's the text of Jassy's memo to the Amazon workforce:
As we’ve just concluded the second phase of our operating plan (“OP2”) this past week, I’m writing to share that we intend to eliminate about 9,000 more positions in the next few weeks — mostly in AWS, PXT, Advertising, and Twitch. This was a difficult decision, but one that we think is best for the company long term.
Let me share some additional context.
As part of our annual planning process, leaders across the company work with their teams to decide what investments they want to make for the future, prioritizing what matters most to customers and the long-term health of our businesses. For several years leading up to this one, most of our businesses added a significant amount of headcount. This made sense given what was happening in our businesses and the economy as a whole. However, given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount. The overriding tenet of our annual planning this year was to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole.
As our internal businesses evaluated what customers most care about, they made re-prioritization decisions that sometimes led to role reductions, sometimes led to moving people from one initiative to another, and sometimes led to new openings where we don’t have the right skills match from our existing team members. This initially led us to eliminate 18,000 positions (which we shared in January); and, as we completed the second phase of our planning this month, it led us to these additional 9,000 role reductions (though you will see limited hiring in some of our businesses in strategic areas where we’ve prioritized allocating more resources).
Some may ask why we didn’t announce these role reductions with the ones we announced a couple months ago. The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we’ve made them so people had the information as soon as possible. The same is true for this note as the impacted teams are not yet finished making final decisions on precisely which roles will be impacted. Once those decisions have been made (our goal is to have this complete by mid to late April), we will communicate with the impacted employees (or where applicable in Europe, with employee representative bodies). We will, of course, support those we have to let go, and will provide packages that include a separation payment, transitional health insurance benefits, and external job placement support.
If I go back to our tenet - being leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole - I believe the result of this year’s planning cycle is a plan that accomplishes this objective. I remain very optimistic about the future and the myriad of opportunities we have, both in our largest businesses, Stores and AWS, and our newer customer experiences and businesses in which we’re investing.
To those ultimately impacted by these reductions, I want to thank you for the work you have done on behalf of customers and the company. It’s never easy to say goodbye to our teammates, and you will be missed. To those who will continue with us, I look forward to partnering with you as we make life easier for customers every day and relentlessly inventing to do so.
- KC's View:
It is disconcerting that Amazon now is in the position of making cuts in areas of the company that traditionally have been growth engines. It may be reflective of a company dealing with new realities, but it also seems to reflect an internal mindset that is different these days. Less aggressive. Less ambitious. More measured and cautious.
Not that necessarily is a bad thing. But it is different. A friend of mine in the tech sector sent me a brief text message after the new layoffs were announced: "Brutal."
In its analysis, CNBC writes that "when Amazon announced just over two years ago that founder and then-CEO Jeff Bezos would turn the helm over to former cloud boss Andy Jassy, few investors or analysts reacted with much concern.
"Jassy, a close confidant of Bezos, was known as an Amazon lifer and a celebrated figure inside the company and across the industry because he launched Amazon Web Services, which became one of the most valuable businesses in the world. Analysts at Wedbush practically yawned at the move, saying the transition would likely be 'seamless and largely inconsequential'."
Not so much.
CNBC writes that "since Jassy officially succeeded Bezos in July 2021, Amazon has experienced its most turbulent period since the dot-com crash. Last year marked its slowest year for revenue growth as a public company, and Jassy has been forced to guide Amazon through a series of cost-cutting measures that nobody predicted would be necessary when business was booming through the Covid pandemic … Much of Jassy’s unfortunate circumstance can be attributed to bad timing — historically high inflation pushed the Federal Reserve to raise rates, crippling growth across the U.S. tech sector. But whether it’s bad luck, his own missteps or some combination of the two, Jassy is an unenviable position as only the second CEO in Amazon’s history.
"Bezos, his predecessor, transformed Amazon from a bookseller into a retail, cloud computing and advertising giant that became known for an inventive, startup-like atmosphere. On Bezos’ watch, the company turned out groundbreaking inventions like the Kindle e-reader and the Echo smart speaker, and invested in new verticals like original content, health care and brick-and-mortar grocery stores.
"So far, the Jassy era has been all about belt tightening and retrenchment from some of Amazon’s more experimental pursuits."
All of which is true. But to me, here are the most important 35 words from the CNBC analysis:
"Jassy is under immense pressure to prove he can get expenses under control. But in order to revive the enthusiasm that Bezos drove into Amazon’s culture, he’s eventually got to find new engines for growth."
There are leaders, and there are managers. There are people who are good at reviving companies with tenuous finances, and there are people who are good at reviving companies' sense of spirit, energy and values. But few executives, in my experience, are good at doing both, and I'm not sure that Jassy is one of them.
Maybe he is. The opportunity is there for him to prove himself.
When Bezos was stepping down, he told company employees that "Amazon couldn’t be better positioned for the future. We are firing on all cylinders, just as the world needs us to. We have things in the pipeline that will continue to astonish.”
Lately, there only thing that is astonishing is the degree to which some of Amazon's cylinders seem to be misfiring.