Amazon CEO Andy Jassy defends pandemic hiring frenzy as mass layoffs begin
Amazon doesn’t regret years of explosive growth and overemployment — even as it embarks on the biggest job cuts campaign in its history.
Amazon CEO Andy Jassy announced in November that the company would start laying off employees in several departments and suggested the layoffs would likely continue into 2023. Jassy’s comment came days after that New York Times reported that the company has plans to lay off around 10,000 employees in equipment, retail and human resources.
Jassy justified the mass layoffs on Wednesday New York Times DealBook Summit, citing imminent economic uncertainty that prompted the company to cut spending. “We just felt like we needed to rationalize our costs,” he said.
But at the same time, Jassy defended the hiring wave and explosive growth Amazon has experienced in recent years, despite the abrupt about-face the company has been forced to make this year.
Amazon’s retail business grew tremendously in the early days of the pandemic, and at one point the company was hiring as many as 1,400 new hires a day. “It forced us back then to make decisions, spend a lot more money and build the infrastructure much faster than we ever imagined,” Jassy said on Wednesday.
“We knew we might overbuild,” he added.
Amazon’s cost-cutting moves this year were prompted by a darkening economic environment for tech-sector companies, many of which have also resorted to layoffs to keep spending down. Twitter, Meta and Microsoft have also announced cuts this year, and many have cited a similar culprit: falling demand for technology products as the lockdown phase of the pandemic faded.
Amazon did not respond immediately wealth‘s request for comment.
One of the Amazon divisions undergoing layoffs is the equipment division, which has weighed heavily on the company in recent years. The unit, which has historically had over 10,000 employees working on devices like Alexa and Echo, may have lost the company as much as $5 billion annually in recent years Wall Street Journal reported last month.
Sluggish device sales have led Amazon to lean on other entities, including its advertising business — which generated $31.2 billion in revenue last year — as well as sales. But despite entering the traditionally busy holiday season, Amazon warned at its last shareholder meeting in October to expect lower sales going forward after the company reported dismal earnings that fell short of Wall Street expectations.
Company executives said they expect revenue of between $140 billion and $148 billion for the fourth quarter this year, which would represent annual growth of just 2% to 8%, well below 10% annual growth, that the company achieved in the fourth quarter of last year .
Amazon’s poor earnings report prompted Bank of America analysts to claim that “the recession may already be here” as consumer spending shows signs of slowing.
However, that outlook may have been boosted by retailers’ record-breaking start to the holiday season seen this week. Consumers spent a record $11.3 billion on Cyber Monday, according to Adobe Analytics, and the company announced Wednesday that Thanksgiving’s Christmas shopping weekend was “record-breaking” and “the biggest ever.”
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