The news: Big Tech’s bloodletting continues with reports that Amazon has plans to lay off 10,000 people in retail, devices, and human resources, per Insider.

Adjusting from pandemic hypergrowth: Amazon, like various other Big Tech companies, went on a hiring spree during the past two years. It added 427,300 employees in 10 months, which brought its total workforce to more than 1.2 million, per The New York Times. 

• The 10,000 jobs it’s cutting represent 1% of Amazon’s global workforce and 3% of its corporate employees. 
• Amazon is bracing for lower Q4 profit expectations due to rising inflation and interest rates and weakened consumer spending. 
• “Amazon is making the tough calls necessary to stay competitive in today’s retail environment,” said John Nash, co-founder at Lucy Nash Jewelry.
• Affected teams will include human resources, which is in line with earlier warnings of hiring freezes across the board.
• The devices team that oversees Alexa smart assistants and smart home products will also be affected by the layoffs as the company mulls contraction of core businesses. 
• Other big tech companies undergoing similar layoffs include Meta (11,000), Twitter (3,700), Salesforce (1,000), Stripe (1,000), Lyft (700), Redfin (850), Opendoor (550), and Zendesk (350), per Axios.

Course correction: Amazon added up to 1,400 new workers a day in 2020, mostly as a response to the overwhelming reliance on ecommerce and delivery services as COVID-19 cases intensified. 

• Most of Amazon’s hires at the start of the pandemic were warehouse workers, but there was also a spike in software and cloud engineers, as well as hardware specialists. 
• The layoffs are massive, but for a company the size of Amazon, they are a minor course correction to better weather upcoming headwinds.
• “There will likely be more rounds of layoffs in early 2023 as the recession deepens. Companies are already starting to feel the pinch, and many are projecting that things will only get worse in the new year,“ said Nash.
• "Amazon will be able to focus on profitable projects such as the Amazon Ads business unit, which generated over $31 billion in 2021,” said Babar Khan Javed, director of public affairs at Z2C Limited, a Singaporean accelerator for marketing technology startups.

The bigger picture: “Amazon is expected to see better profitability with the reduction in headcount,” said Nash. “Overall, this is a move that should help Amazon focus on its core business and improve its bottom line.”

Expect Big Tech companies to continue resorting to layoffs until the economy reveals a clearer picture of recovery.

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.

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