Big Tech’s brutal January continues as Amazon begins largest layoffs in its history

Typically the worst month for layoffs, January is off to an auspicious start with today’s news that Amazon has announced plans to eliminate more than 18,000 jobs to reduce costs.

Reports back in November revealed that the tech giant was preparing to downsize, reducing its headcount by up to 10,000. However, CEO Andy Jassy acknowledged Wednesday in an email to employees that this estimate had been nearly 100% short. He said the cuts are to the corporate and technology divisions, representing a significant ramp-up of Amazon’s previously announced cost-cutting plans.

Amazon says the wave of layoffs will commence on January 18 and mostly affect its Stores and PTX teams. This means among the affected departments are those that handle Amazon’s website, global field operations, and all its physical spaces—warehouses and brick-and-mortar stores alike.

To put these cuts in perspective, Amazon had 800,000 employees when the pandemic began. At the end of 2021, its workforce had doubled in size, to 1.6 million. But then just as fast, growth slowed to its lowest rate in two decades, all while Amazon—to compete in the increasingly red-hot tech sector—was spending more and more money to attract and retain talent (like by doubling the starting-pay ceiling). Additionally, by this point, founder Jeff Bezos had given the corporate reins to Jassy, who was left to appease investors. Jassy began scrambling to undo ways that Amazon overbuilt for COVID-era demand. Late last year, the Seattle corporate office reportedly asked managers to prep for layoffs, leaving employees bracing for this week’s cuts.

This round equals roughly 6% of the 300,000-person corporate staff, and more than 1% of Amazon’s entire workforce, hourly workers included. Executives have recently warned investors that they’re not out of the thick of things yet, and Jassy’s note conceded that current corporate planning “has been more difficult given the uncertain economy, and that we’ve hired rapidly over the last several years.” Per the tracking site Layoffs.fyi, the tech sphere shed more than 150,000 jobs in 2022 alone, a number likely to grow even higher as January stretches on.

One group not included in Amazon’s layoffs? Hourly warehouse workers. They number more than a million, but they work on contract, and Amazon doesn’t have to trim their numbers often—they’re a self-governing bunch who tend to reduce themselves through very high attrition. However, as one Amazon union rep in Spain told Reuters, “We can assume that this is the first step preceding layoffs in the rest of operations, not just the corporate workforce.” Although he added that he can’t be sure because “we don’t have any official data.”

Jassy’s memo did offer a deeper look into the Amazon corporate psyche: Good companies are “not in heavy people expansion mode every year,” and it asked employees to view this pivot in the context of Amazon’s leadership principle, “Invent and Simplify.” Sometimes, it’s easy to “overlook the importance of” inventing and simplifying, Jassy said, when “figuring out what matters most” and “adjusting where we spend our resources and time.”

Amazon is not the only big tech company to undergo mass layoffs this week. Just (January 27, 2023), Salesforce announced it was cutting about 8,000 employees, or 10% of its workforce. Smaller tech-focused companies, such as Stitch Fix and Vimeo, also announced layoffs this week.