The news: Amazon announced it’s laying off more than 18,000 employees, a markedly larger number than previously planned and a sign that the spate of layoffs in the tech industry could worsen before they get better, per Bloomberg.
Where Big Tech leads, smaller players are likely to follow: Amazon is the latest Big Tech behemoth to shed headcount, on the heels of Salesforce’s decision to lay off 10% of its staff, or 8,000 workers. Amazon’s reasoning is that it hired too many people during the pandemic.
A cascading effect of layoffs on the tech industry: 2023 seems to be continuing on last year’s trend of layoffs as a means to recover from the economic downturn.
Tech and media sectors look to be particularly volatile, especially as tech behemoths look to retain stockholder value in the face of adversity and as advertising budgets evaporate.
What’s next for Amazon? Its immense size and wide range of businesses will make it extra challenging for Amazon to restructure, especially as the economy takes a toll on ecommerce growth.
“These changes will help us pursue our long-term opportunities with a stronger cost structure,” CEO Andy Jassy said. “However, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles.”
Our take: With Amazon’s growth slowing to its lowest rate in two decades, the company will look to aggressively cut down on nonessential products and services and consider continued layoffs to stay profitable.
This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.