The economic uncertainty is once again pushing the big tech companies to lay off with a vengeance. After a first wave of 18,000 layoffs, 9,000 more have been added at Amazon. At issue: the economic context,
The massive layoffs are linked: after 18,000 employees last December, Amazon announced to thank 9,000 more, as reported by the Wall Street Journal. These job cuts concern Amazon’s cloud and advertising, as part of a cost-cutting strategy.
9,000 additional job cuts at Amazon
However, not everything should have happened like this: at the start of the Covid-19 pandemic, Amazon had recruited massively. More than 800,000 positions had been filled between the end of 2019 and the beginning of 2021, to cope with the increase in orders. But at the end of the health restrictions, the latter saw their number reduced. To respond to this, Amazon froze hiring and reduced its involvement in unprofitable businesses. But this is apparently not enough: Andy Jassy, general manager of Amazon, 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 our workforce “.
These layoffs were not announced earlier because the company needed to determine which positions should be cut. They will be completed by the end of April. The 18,000 employees fired last December already accounted for around 5% of Amazon’s payroll. These previous dismissals mainly concerned products, recruitment and sales on the Amazon site. In total, it is therefore between 7 and 8% of the company’s employees who will be made redundant.
The consequences of the economic context could also extend to the remaining employees. THE Wall Street Journalexplains that ” Amazon has made other changes that will likely result in more voluntary turnover than in recent years. “The newspaper explains that this” means that many employees will see their wages reduced this year“.
Why do tech companies lay off so much?
This massive layoff at Amazon is actually the consequence of a trend among cloud service customers. According to IDC analyst Rick Villars interviewed by the Wall Street Journal , they are looking 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 biggest ones. The media IOCwrote a few days ago that the editor Ahrefs, specialized in SEO, managed to save 400 million dollars in three years. Very significant savings that would be linked to the choice to use self-hosting rather than Amazon Web Services. For Ahrefs 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 spends today.
On the other hand, Amazon has never made so much money with 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”, whether in the cloud, but also in other markets. Amazon recognizes this itself: its chief financial officer Brian Olsavksy declared 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 journalistDigitalMaxence Fabricon, large companies “stopped dreamingand refocus on their core and most lucrative activities.
This materializes at Amazon by stoppingDPReview, a media site (and YouTube channel) specializing in cameras, which in twenty-five years has become an English-language reference. Since 2007 it was owned by Amazon, but the company decided to stop this activity. WhetherThe Vergespecifies that there would bethat” eleven employees, we can assume that the medium is not profitable for Amazon and that the latter has decided to stop the costs. Another consequence: Amazon announced the closure of eight Amazon Go stores. These were physical stores with a promise, that of self-service. We entered the store, we took items and when we came out, we were automatically debited.
Tech in crisis: more than 300,000 employees made redundant since 2022
According to the websiteLayoffs.fyi, which lists layoffs in the new technology industry around the world, there would have been more than a thousand companies that would have laid off some 161,000 employees. In 2023, the movement tends to accelerate, since there would already be more than 150,000 layoffs in more than 500 companies.
This trend actually dates back to the second quarter of 2022, synonymous with the end of several health restrictions around the world, but also with economic difficulties linked to shortages of components and more generally to generalized inflation. Like all sectors of the global economy, the new technologies sector is impacted.
These massive layoffs are even more visible among the digital giants, as they concern employees: we are talking in the thousands. In January, Microsoft announced the layoff of 10,000 employees, or 5% of its payroll. The objective here was also to rationalize costs, while getting ready to focus on AI. Two days later, it was Google’s turn to inform us of the thanks of 12,000 workers. Sundar Pichai, CEO of the company, also spoke of economic difficulties and the redefinition of expenditure items. Another mastodon to indicate important dismissals: Meta. Mark Zuckerberg’s company had already laid off 11,000 employees at the end of 2022 and returned to the charge with 10,000 additional layoffs a few days ago. In total, for these five companies alone, there are no less than 71,000 layoffs in less than five months.
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