The economic uncertainty is once again forcing the big tech companies to retaliate. After an initial wave of 18,000 layoffs, Amazon has added another 9,000. At issue: the economic context,
The massive layoffs are linked: after 18,000 employees last December, Amazon announced it would lay off another 9,000, as reported by the Wall Street Journal. This job loss relates to Amazon’s cloud and advertising, as part of a cost-cutting strategy.
9,000 additional job losses at Amazon
However, not everything should have happened this way: at the start of the Covid-19 pandemic, Amazon had recruited massively. Between the end of 2019 and the beginning of 2021, more than 800,000 vacancies were filled to accommodate the increase in orders. But at the end of health restrictions, the latter saw their numbers reduced. To respond to this, Amazon froze hiring and reduced its involvement in unprofitable companies. But this is apparently not enough: Amazon general manager Andy Jassy indicated to the American newspaper that ” Given the economic uncertainty in which we live and the uncertainty that prevails in the near future, we have chosen to rationalize our costs and workforce “.
These layoffs were not previously announced as the company had to determine which positions to cut. They will be ready at the end of April. The 18,000 workers laid off last December already accounted for about 5% of Amazon’s payroll. These previous layoffs were mainly related to products, recruiting and sales on Amazon’s site. In total, therefore, between 7 and 8% of the company’s employees will be laid off.
The effects of the economic context could also extend to the remaining workers. THE Wall Street Journalexplains that ” Amazon has made other changes that are likely to result in more voluntary sales than in recent years.“The newspaper explains that this” means that many employees will see their wages fall this year“.
Why are tech companies firing so many?
This mass layoff at Amazon is actually due to a trend among cloud service customers. According to IDC analyst Rick Villars interviewed by theWall Street Journal, they want to save money on their IT infrastructure. But on the other hand, the innovations promised by artificial intelligence and by automatic text and/or image generation tools have not yet had a significant impact.
Some customers even choose to use self-hosted infrastructures, especially the largest ones. The media IOC wrote a few days ago that editor Ahrefs, who specializes in SEO, managed to save $ 400 million in three years. Very significant savings that would come with choosing to use self-hosting instead of Amazon Web Services. For Ahref’s IT production manager Efim Miroshnik, this would have resulted in “costs so high that we wondered if our company could exist with a 100% infrastructure in the cloud.In fact, the cost of hosting at Amazon would be 11 times what Ahrefs is spending today.
On the other hand, Amazon has never made so much money from its cloud computing business and so has the rest of the market. In reality, we are witnessing a slowdown in growth and spending in “Gamam”, both in the cloud and in other markets. Amazon itself admits this: its chief financial officer Brian Olsavksy stated this month that “the company had seen a continued slowdown in AWS spending as customers sought to cut costs. Amazon’s advertising business, which has become a major sales driver, also saw a slowdown in the fourth quarter.“, write theWall Street Journal. For the journalist Digital Maxence Fabricon, big companies”stopped dreamingand refocus on their most important and lucrative activities.
This is reflected at Amazon by stoppingDP review, a media site (and YouTube channel) specializing in cameras, which has become an English language reference in twenty-five years. Since 2007, it was owned by Amazon, but the company decided to stop this activity. Or The edge indicates that there would bethatWith eleven employees, we can assume that the medium is not profitable for Amazon and that the latter has decided to stop paying the costs. Another consequence: Amazon announced the closure of eight Amazon Go stores, physical stores with a promise of self-service. We went into the store, took stuff with us, and when we came out, we were automatically written off.
Tech in crisis: More than 300,000 workers laid off since 2022
According to the website Dismissed. for your information, which lists the layoffs in the new technology industry around the world, there would have been more than a thousand companies that laid off some 161,000 employees. In 2023, the movement tends to accelerate, as more than 150,000 layoffs would already be made in more than 500 companies.
This trend actually goes back to the second quarter of 2022, synonymous with the end of various health restrictions around the world, but also with economic difficulties related to component shortages and more generally with general inflation. Like all sectors of the global economy, the new technologies sector is also affected.
These mass layoffs are even more visible with the digital giants, as they involve workers: we’re talking thousands. In January, Microsoft announced the layoff of 10,000 employees, or 5% of its payroll. The goal here was also to rationalize costs as we got ready to focus on AI. Two days later it was Google’s turn to inform us about the thanks of 12,000 employees. Sundar Pichai, CEO of the company, also spoke about economic difficulties and the redefinition of expenditure items. Another mastodon to signify major layoffs: Meta. Mark Zuckerberg’s company had already laid off 11,000 employees by the end of 2022 and returned to leadership a few days ago with an additional 10,000 layoffs. In total, there have been no less than 71,000 redundancies in less than five months for these five companies alone.