Amazon to axe 18,000 workers as more US tech firms cut jobs

Amazon boss blames economic uncertainty and recent rapid hiring while Salesforce cuts 8,000 roles, almost 1 in 10 staff

The jobs purge sweeping US tech firms has escalated as Amazon expanded staff-cutting plans to affect more than 18,000 workers and the software maker Salesforce said it would axe 8,000 employees.

Amazon’s reductions are the biggest by a big tech firm over the past year and the largest set of layoffs in the company’s history. The online retailer’s chief executive cited “the uncertain economy” for the move and said Amazon had “hired rapidly over the last several years”.

The latest cuts follow a wave of redundancy announcements at tech companies in recent months, including 11,000 jobs at Mark Zuckerberg’s Meta, up to 6,000 at the computer maker HP, 3,750 at Twitter and 1,300 at the company behind Snapchat.

Andrew Jassy, Amazon’s CEO, said in a note to employees: “Between the reductions we made in November and the ones we’re sharing today, we plan to eliminate just over 18,000 roles.” It was reported in November that Amazon had planned to cut 10,000 roles.

Jassy said Amazon had weathered “difficult economies” in the past and would continue to do so. “These changes will help us pursue our long-term opportunities with a stronger cost structure.”

He said the expanded layoffs would mostly affect the company’s Stores division, which includes its online retail site as well its bricks and mortar sites – such as Amazon Fresh and Amazon Go - and its human resources unit.

Jassy did not specify where the affected roles were located, but said Amazon would communicate with employees “or where applicable in Europe, with employee representative bodies”, from 18 January.

The job cuts represent a swift about-turn for the retailer that recently doubled its basic pay ceiling to compete more aggressively for talent.

The layoffs amount to 6% of Amazon’s roughly 300,000 person corporate workforce, and equate to about 1.2% of the company’s global workforce of more than 1.5m.

Amazon also announced this week it had taken out an $8bn (£6.6bn) unsecured loan for “general corporate purposes”. The company said it has been using different financing options in recent months amid an “uncertain macroeconomic environment”.

Jassy told staff in November that layoffs were coming owing to the economic landscape and the company’s rapid hiring over the past few years. Wednesday’s announcement included earlier job cuts that had not been numbered. The Seattle-based company had also offered voluntary buyouts and had been cutting costs in other areas of its sprawling business.

Salesforce, meanwhile, said it was laying off about 8,000 employees, or 10% of its workforce.

The cuts announced on Wednesday are by far the largest in the 23-year history of the San Francisco company, founded by former Oracle executive Marc Benioff. He pioneered the method of leasing software services to internet-connected devices – a concept now known as “cloud computing”.

The layoffs are being made on the heels of a shake-up in Salesforce’s top ranks. Benioff’s handpicked co-CEO, Bret Taylor – who was also Twitter’s chair at the time of its tortuous $44bn sale to the billionaire Elon Musk – left Salesforce recently. Soon after, Slack’s co-founder, Stewart Butterfield, left. Salesforce bought Slack two years ago for nearly $28bn.

Salesforce workers who lose their jobs would receive nearly five months of pay, health insurance, career resources and other benefits, according to the company. Amazon said it was also offering a separation payment, transitional health insurance benefits and job placement support.

Benioff, now the sole chief executive at Salesforce, told employees in a letter that he blamed himself for the layoffs after continuing to hire aggressively in the pandemic, with millions of Americans working from home and demand for the company’s technology surging.

“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” Benioff wrote.

Salesforce employed about 49,000 people in January 2020, just before the pandemic struck. Salesforce’s workforce today is still 50% larger than before the pandemic.

The CEO of Meta Platforms, Mark Zuckerberg, also acknowledged he misread the revenue gains that Meta, the owner of Facebook and Instagram, was reaping during the pandemic when he announced in November that his company would lay off 11,000 employees, 13% of its workforce.

Shares in Tesla have also fallen in the past year owing to a combination of factors, including fears over demand from the Covid-hit Chinese market and its CEO, Elon Musk, being distracted by his $44bn acquisition of Twitter.

Apple’s stock has also been hit by concerns about the impact of the Chinese Covid outbreak on its supply chain, with its market capitalisation dipping below $2tn at one point this week.

Associated Press, Reuters and Agence France-Presse contributed to this report


Dan Milmo and agencies

The GuardianTramp

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