Amazon begins layoffs in AWS cloud division amid restructuring efforts
Since the global layoff spree began, Amazon has been terminating employees. Now, the company is also kicking out staff members within its cloud services operation, as sales growth in its most profitable division continues to slow down.
The head of Amazon Web Services informed their employees in the US, Canada, and Costa Rica who were impacted by the job cuts via email early on Wednesday. While AWS is responsible for the majority of the company's profits, its growth is currently slowing down due to corporate customers seeking ways to cut expenses.
Amazon is eliminating approximately 27,000 positions, primarily in corporate roles, following a hiring surge during the pandemic that resulted in an overstaffed company. After already completing a round of job cuts earlier this year that affected around 18,000 employees, Amazon revealed in March that an additional 9,000 layoffs were on the way.
CEO Andy Jassy stated that these layoffs would be distributed among AWS, human resources, advertising, and Twitch live streaming service. Recently, job cuts have been implemented in various areas, including Amazon's video game group and Twitch.
“It is a tough day across our organisation” AWS chief Adam Selipsky said in the email reviewed by Bloomberg. Similar to the rest of Amazon, AWS experienced significant headcount growth due to increased demand for digital services during the pandemic.
“Given this rapid growth, as well as the overall business and macroeconomic climate, it is critical that we focus on identifying and putting our resources behind our top priorities — those things that matter most to customers and that will move the needle for our business,” Selipsky said.
“In many cases, this means team members are shifting the projects, initiatives or teams on which they work; however, in other cases, it has resulted in these role eliminations,” he added.
Selipsky stated that any cuts in regions beyond North America would adhere to local protocols, which may include discussions with employee organizations if required by law.
Certain teams affiliated with AWS had previously experienced layoffs, such as members of the "Just Walk Out" physical stores technology group who became a part of the division during a reorganisation in the prior year, along with recruiters. The initial phases of job cuts had the most significant impact on Amazon's recruiting and human resources teams, as well as their expansive retail and devices groups.
On Wednesday, Amazon's beleaguered HR group experienced additional job cuts, as the team has already undergone waves of buyout offers and layoffs that commenced in November.
Beth Galetti, who oversees the People Experience and Technology team, known as HR at Amazon, informed employees of the most recent round of job cuts via email on Wednesday. She acknowledged the significant impact that these decisions would have on both departing employees and their colleagues who will continue to work at the company, emphasising that these determinations were not made lightly.
Regarding the recent job cuts, an Amazon representative opted not to provide a statement and instead referred back to CEO Jassy's email from March, which indicated that layoffs were imminent. Amazon has imposed a hiring freeze on roles beyond its warehouses and delivery operations, though some jobs and projects are exempt. Managers at the company have reported uncertainty as to when Amazon may resume hiring on a larger scale.
As of the end of December, Amazon had a global workforce of 1.54 million individuals, with the vast majority working on an hourly basis and handling product packaging and shipment in warehouses. Before the initial layoffs began in November, the company had approximately 350,000 corporate employees.
Several other major tech companies, including Alphabet Inc. (Google's parent company), Dell Technologies Inc., International Business Machines Corp., Meta Platforms Inc., and Microsoft Corp. have also implemented workforce reductions.
Amazon is set to release its financial results on Thursday, and stakeholders will monitor the results to assess whether the cost-cutting measures have positively affected profitability and whether there is a halt in the decline of cloud services sales growth.