Amazon Plans to Lay Off Another 9,000 Employees
Amazon Plans to Lay Off Another 9,000 Employees
Employees at Amazon's cloud division, including the previous CEO of AWS, Andy Jassy, were not exempt when the company announced today that it was laying off another 9,000 workers
According to TechCrunch, AWS contributed about 10% of
today's total. The business declined to corroborate such figures, citing Jassy's
memo to staff, which was published this morning, as the main point of its
explanation.
According to that message, the corporation is implementing
the layoffs in phases because some managers were still reviewing their
departments at the time of the first round and weren't prepared. "The
simple answer is that not all of the teams were through with their analysis in
the late fall," Jassy wrote. "Instead of rushing through these
assessments without the proper diligence, we elected to communicate these choices
as we've made so individuals have the information as soon as possible.
Ray Wang, founder, and principal analyst at Constellation
Research says that Amazon has had to look carefully at every aspect of the
organization, and AWS was no exception. “This is part of a larger trend of tech
companies getting lean again, and Amazon had gotten bloated in years past. They
finally completed their analysis a few weeks back and now AWS has cut too,” he
said.
The cloud division's growth rate dropped to 20% in the company's
most recent earnings report at the beginning of the month, from over 39% growth
the year before. The situation was made worse by CFO Brian Olsavsky's
indication that growth was sluggish even further. In the coming quarters at
least, we anticipate that these optimization efforts will continue to hinder
AWS growth. AWS's year-over-year revenue increase is already in the mid-teens in
the first month of the year, he noted at the time.
In light of this, the layoffs shouldn't be unexpected. In
actuality, growth in the cloud infrastructure business as a whole has been
sluggish. After years of explosive growth, cloud expenditure is being
restrained, and this is beginning to affect the market. The cloud
infrastructure market's total growth rate dropped to 21% at the end of the most
recent earnings report cycle from 36% the year before.
Additionally, Microsoft, a longtime adversary of Amazon,
increased its market share. While Microsoft's growth also slowed in the
previous quarter, it has been expanding faster and is beginning to gain ground
on AWS gradually.
However, despite these figures, according to John Dinsdale,
chief researcher and research director at Synergy Researcher Group, a research
organization that tracks the cloud infrastructure market, the market is still
expanding significantly despite external factors like "a historically
strong US dollar and a severely constrained Chinese market."
Given the market decline, Dinsdale believes the layoffs are
understandable, but he doesn't believe they should raise any red flags.
"So, is market growth slowing down? Yes. Is there room for restructuring
and some cost savings for businesses whose sales and organizations have risen at
dizzying rates? Yes. Is the sky about to fall? No, he replied.