Amazon cuts 9,000 more workers in efficiency drive

Amazon is laying off a further 9,000 workers, adding to the 18,000 lay-offs announced in January, as a downturn in consumer spending forces the ecommerce and cloud computing giant into a retrenchment.

The majority of the new cuts will come at the company’s cloud computing unit, Amazon Web Services, the video-game streaming platform Twitch, and its human resources and advertising departments.

The company employs more than 1.5mn workers worldwide, mostly warehouse and fulfilment workers. Amazon’s recent job cuts have targeted better-paid corporate roles in an effort to reshape its back-office operations.

“Given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount,” chief executive Andy Jassy said on Monday.

The move comes after the Seattle-based company paused construction on a new headquarters in Virginia, pulled back from launching new physical grocery stores and closed warehouses across the UK in recent months.

Like other tech groups, Amazon hired extensively in recent years to meet stronger demand for its services from locked down customers during the height of the pandemic. This expansion “made sense given what was happening in our businesses and the economy as a whole”, Jassy said.

Higher interest rates and a downturn in consumer spending power have forced tech companies to trim spending, with almost 140,000 lay-offs by tech groups in 2023, compared with 161,000 in the entirety of 2022, according to Layoffs.fyi, a website that tracks lay-offs in the sector.

Investors have been rewarding tech groups for cutting jobs, with the share prices of Meta, Alphabet, Amazon and Microsoft rising since the start of 2023.

But those efficiency measures have come at a price. Those four big tech groups have revealed that they had collectively incurred more than $10bn in charges related to mass redundancies and other cost-cutting moves.

Amazon began trimming its headcount in November, starting with a “voluntary severance” programme. In January it announced it was cutting 18,000 jobs. Its share price has risen 14 per cent this year, taking the company’s valuation to more than $1tn. Amazon stock fell 1.5 per cent in morning trading on Monday.

Jassy said cuts were being announced in stages as teams completed internal analyses, adding that final decisions will be made by mid-April.

Amazon spent $640mn on severance in the fourth quarter of 2022, as well as an additional $720mn on abandoning real estate projects.