Amazon 10,000 Job Cuts: The Tech Layoff Butterfly Effect

Distilled Post
They say that when a butterfly flaps its wings in the Amazonian rainforest, it can change the weather half a world away. Will Amazon's layoff spree have the same effect across the tech world?

It's that time of year. Mariah has been thawed off for the holiday season, and our US cousins are preparing for Thanksgiving. Most of us have already clicked on item 20 in our Amazon Shopping basket,to ensure that we don’t miss our kid's Christmas requests for Lightning McQueen, Paw patrol and Peppa Pig toys. As we do this, Amazon's Jeff Bezos hands $100m to Dolly Parton for her amazing service; and announces that he wants to give away all his $124bn fortune, following his ex-wife MacKenzie Scott who has been on the giving trail since their divorce.


Throughout Bezos' show of magnanimity, the company he founded plans to lay off around 10,000 employees. People in corporate and technology roles will be handed pink slips early this week, in what would amount to its biggest such reduction to date. The cuts would be the largest in Amazon’s history and come as other tech companies including Meta and Twitter are also shedding workers. This follows Meta’s 11,000 layoffs, 4000 at Peloton, 3700 at twitter, 2100 at salesforce and the list goes on. Amazon’s cuts will reportedly focus on the e-commerce giant’s devices unit, which houses voice-assistant Alexa, as well as its retail division and human resources. Job cuts will be assessed on a “team by team” basis, with the first firings potentially happening as soon as this week.

As of 31 December last year, Amazon had about 1,608,000 full-time and part-time employees and the cuts would represent about 3% of Amazon’s corporate employees and less than 1% of its global workforce. The vast majority are frontline employees at its warehouses and other logistics facilities. While that employee base fluctuates with seasonal demand — and doubled during the coronavirus pandemic — corporate lay-offs have been rare.

The planned cuts come as Amazon faces soaring costs and slowing growth in its online stores business. Its market capitalisation has fallen about 42 per cent since the beginning of this year to about $1 Trillion USD.

The real question is what does this means for the tech sector - as these are arguably the best and well-capitalised companies outside of China. For smaller start-ups and growth stage companies, 2022 has been a blood bath. Not even the likes of startup unicorns like GoPuff, Beyond Meat, Robin Hood or Vroom  have escaped the workforce cutdowns, culling over 2,200 employees and more. 


What do these tech lay-offs spell of the holiday season. Mass unemployment means that the public won’t be able to spend more - meaning lower sales, lower taxes and lower investments.  It’s hard to know if this is our butterfly flapping its wing or just companies sharpening their pencils for the year ahead.