Amazon to Cut 18K Jobs Amid Rising Costs

Facts

On Wednesday, US multinational tech giant Amazon announced it would cut over 18K jobs — roughly 6% of its corporate workforce — in an ongoing effort to rein in costs.
In a letter to employees, CEO Andy Jassy cited the “uncertain economy” and Amazon's decision to hire “rapidly over the last several years” as reasons for the cuts, which will primarily affect staff in Amazon Stores and PXT organizations.
He added that the company will offer severance to laid-off employees, including a separation payment, transitional health insurance benefits, and external job placement support.
The cutbacks come after Amazon in October reported making $127.1B in sales, an increase of 15% from a year earlier. Despite returning to profitability, the e-commerce giant reported $2.5B in operating losses in its international operations.
Furthermore, the news of massive layoffs comes the day after Amazon took out an unsecured $8B loan from several lenders including TD Securities. Amazon’s stock rose 2% in after-hours trade, though the increase follows a slump of almost 50% in 2022.
This is the latest in a series of tech industry layoffs, after San Francisco-based company Salesforce fired 10% of its staff on Wednesday. Meanwhile, Facebook and Instagram parent company Meta fired 13% of its staff in November 2022.

Narrative A, as provided by Forbes. Although the pandemic tech boom allowed companies to increase their workforces by as much as double, recent economic woes have, unfortunately, shattered that brief market boom. The US Federal Reserve has reacted to inflation by hiking interest rates, leading to a reduction in available venture capital while digital ad revenue is also down. The firms that over-hired during the pandemic are now being forced to downsize.
Narrative B, as provided by Harvard Business Review. Layoffs are the old-school way of dealing with recession. Companies should today find alternative strategies because social media has made everyone a workers' rights activist with a global microphone. Beyond the poor optics, companies that conduct mass layoffs have been proven to perform more poorly than those that avoid them because of the cost of restructuring and the low morale among remaining staff.