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Amazon is laying off 10,000 employees. Why this could be a signal of something more ominous

Amazon is the latest technology company to fire employees after Meta and Twitter last week. What is triggering this downturn in Big Tech? Why is Amazon laying off employees significant?

Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. (Reuters Photo: Mike Segar)

Amazon is planning to lay off as many as 10,000 employees in “corporate and technology” across the world, The New York Times reported Monday. This follows a spate of sackings and hiring freezes across the tech sector, most prominently by Meta, which laid off over 11,000 employees last week.

What is triggering this downturn in Big Tech?

The main reason is the contraction in demand as the world comes out of the Covid-19 pandemic. The pandemic-induced lockdowns forced people indoors and made them buy more online, spend more time on social media sites, consume more streaming content, and play games with others, are almost over.

This started showing in the numbers of tech companies which were riding a boom for the past few years and hired to sustain the increased demand.

As people return to offices and rediscover the outdoors, engagement across platforms is dropping, along with revenue. As a result, fewer people are needed to manage these platforms.

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Companies that thought the pandemic bump will be sustained by changed user behaviour are realising this is not the case.

To make matters worse, there are indicators that a global recession is in the offing and is already hitting demand for non-essential products in many markets. A purchase that can be put off, is being deferred in many cases.

But why is Amazon laying off employees significant?

For workers, Amazon has been one of the most stable employers in tech. The layoffs, which have not yet been officially announced by Amazon, will be the largest in the company’s history.

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Amazon trimming its workforce is a signal that consumer sentiments are low, especially weeks before the holiday season which is usually the best time of the year for e-commerce.

Amazon is expected to lay off workers in the devices vertical as the spike in demand for Alexa devices starts muting across the world.

Which other tech companies have announced layoffs?

The most significant trimming has come from Meta, the parent company of Facebook, which seems impacted by falling engagement on its platforms coupled with ad tracking policies, which have impacted the effectiveness of campaigns on its platforms. Meta laid off over 11,000 workers last week.

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The more visible trimming, however, has been at Twitter, following Elon Musk’s takeover of the micro-blogging platform. He claims the sackings are needed to rationalise the platform’s business model.

Apple has not announced layoffs but is slowing down hirings as it sees a drop in demand across products and services.

First published on: 15-11-2022 at 08:42:16 am
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