Amazon plans to lay off 10,000 people: What issues is company facing?

November 16, 2022  10:54

Starting next week, Amazon is planning the largest layoffs in the company's history: about 10,000 employees will be laid off, according to The New York Times, citing anonymous company sources.

About 3% of the company's full-time employees and less than 1 percent of its global workforce, which includes more than 1.5 million people will be affected, according to the publication. Most of the cuts are planned in the device development department including the voice assistant Alexa, as well as in the HR service.

Amazon is not the first major technology company to face the need for mass layoffs. Meta, Twitter, and several other major companies have also recently made layoffs.

Why is Amazon forced to cut employees?

During the COVID-19 pandemic, Amazon's did even better: in the face of self-isolation, people started shopping online more, and companies had an increased interest in cloud computing services. As a result, Amazon doubled its workforce in just two years in the face of the pandemic.

But now the market has changed, and as a result, over the past year, the company lost $1 trillion in capitalization and is now forced to cut costs, reduce staff and curtail not very successful projects.

For example, the company has already abandoned Amazon Care, which was a primary care service, and Scout, which was a robotic home-delivery service. According to Bloomberg, there were 400 people working on this project.

Interestingly, as noted above, the team working on the Alexa voice assistant will also be affected by the cuts. In the not-so-distant past, this project was one of the company's top priorities, with Amazon doubling the number of employees working on Alexa and Echo in 2017-2018. At least 10,000 engineers worked on the project in those years. However, it later turned out that although the company sold hundreds of millions of Alexa-enabled devices, the margins of these products are quite low, and they are not generating the expected revenues.

  • Archive