Analysis: Big Tech, eCommerce brace for staffing headwinds
Amazon has become the latest tech giant to reduce the size of its workforce as a result of the global economy’s recent struggles.
In an earnings call this week, Amazon announced that it now has about 100,000 fewer workers compared to the previous quarter. While the e-commerce company is still adding jobs, it has significantly slowed down its hiring process.
In April, Amazon revealed that it was overstaffed after bringing a lot of new people during the Covid pandemic. The company said that it needed to cut its workforce.
“As the variant subsided in the second half of the quarter and employees returned from leave, we quickly transitioned from being understaffed to being overstaffed, resulting in lower productivity,” Amazon CFO Brian Olsavsky said.
Amazon reportedly had to resort to subleasing some of its warehouse space. It also had to pause the development of its facilities set aside for its office employees. At the time, the company said that it was still trying to find out how much space is needed for employees to switch to hybrid work.
Read more: This startup charges $10K to soften the blow of layoffs
Today, Amazon has 1.52 million full- and part-time employees. Despite the recent cuts in its workforce, the company is still considered one of the largest employers in the tech industry.
Amazon joins other tech giants that have already adopted stricter measures regarding their workforce. Earlier this month, Alphabet CEO Sundar Pichai announced that they will be slowing down their hiring for the rest of the year. The company is also switching its focus on bolstering its engineering and technical talent bench.
“Like all companies, we’re not immune to economic headwinds,” Pichai said.
In June, Facebook chief Mark Zuckerberg told his employees that they would be slowing down the recruitment of new engineers by 30%. The company also revealed that it doesn’t plan to fill any empty roles for the time being.
Read more: Meta slashes hiring plans in 2022
Oracle has reportedly started laying off hundreds of staff in the US as the tech giant shifts its priority to its cloud healthcare business.
In an article by The Wall Street Journal, the workforce cuts primarily affected the advertising and customer experience group at Oracle. The group offers services to clients to help them analyse customer data and develop targeted advertising.
News of the layoffs at Oracle comes after the company revealed that it is prioritising its cloud healthcare services. It had recently received approval for its acquisition of electronic-medical-records company Cerner for US$28.3 billion.
The current struggles in the digital advertising market has made Oracle’s ad and customer experience group less central to its business strategy.
According to the WSJ report, Oracle allegedly told laid off employees that they were being cut because of restructuring and realignment in fiscal year 2023 following a change in leadership. The company had also laid off some workers at Cerner as part of its integration into Oracle.
The tech industry’s struggles
Oracle is the latest big name company to either slow down hiring or lay off employees due to the tech industry’s recent struggles. Financial services company Robinhood Markets said that it was cutting its full-time staff by 23% due to a drop in customer trading activities.
In July, Microsoft announced that it will reduce its total workforce of 181,000 employees by less than 1%.
A month earlier, popular video streaming company Netflix revealed that it was laying off 300 employees after already cutting 150 of its staff the month before.
Meanwhile, Facebook parent company Meta told workers that it will adopt stricter guidelines to help improve employee performance. Company CEO Mark Zuckerberg hinted at the possibility of letting people go if they failed to meet the new standards.
Read more: Is Mark Zuckerberg getting stricter with staff?
Alibaba has also laid off nearly 10,000 of its employees due to poor sales amid a slowdown of China’s economy.
The Chinese e-commerce giant had cut 9,241 workers in a span of three months, with the last one having been let go in June. The reduction in workforce size has left Alibaba with a lower payroll–the first time it has happened since March 2016, according to the South China Morning Post.
The recent layoffs is the latest effort by Alibaba to reduce its expenses and make its business model more efficient. The company has been dealing with several challenges, including pressure from regulators and weaker consumer spending.
Despite China having the largest e-commerce market in the world, the country’s economy has also been slowing down of late. This has taken a significant toll on Alibaba’s performance overall.
Cheng Yu, a researcher at the Beijing Kandong Research Institute, believes Alibaba could benefit a lot from reducing the size of its staff and halting non-core activities.
“Alibaba has many businesses which are difficult to make a profit on and do not serve its core businesses,” Cheng told the SCMP.
“It is essential to eliminate such businesses so that the company can reduce cost and increase efficiency.”
Alibaba’s tough year
Alibaba revealed last week that its net income had dropped to 22.74 billion yuan (US$3.4bn) in June. That’s equivalent to nearly half of the 45.14 billion yuan ($6.7bn) that the company earned during the same period in 2021.
In the last quarter, Alibaba’s revenue was only 205.56 billion yuan ($30.39bn), compared to 205.74 billion yuan ($30.42bn) last year. This suggests that the company’s earnings have been flat so far in 2022.
However, Alibaba CEO Daniel Zhang also announced that they are planning to expand its workforce by adding 6,000 fresh university graduates this year.
Before the recent round of layoffs, Alibaba had reportedly cut workers from several of its businesses including Alibaba Cloud, DingTalk, and Taobao Marketplace, back in May.