Amazon’s hiring spree during the pandemic has come to an end as the tech giant looks to curb expenses amid slowing demand and rising costs across its business.
The company’s headcount grew by 21,000 employees during the third quarter, as revealed in its most recent earnings report.
That pales in comparison to the same period in 2021, when Amazon added 133,000 workers, and in 2020, when it added 248,500 people.
Amazon’s total direct workforce is now 1.54 million, which is up 5% year-over-year.
The Seattle tech giant saw shares fall by nearly 20% Thursday after issuing a lower-than-expected guidance for the holiday quarter.
On a call with reporters, Amazon CFO Brian Olsavsky said the company is preparing for “what could be a slower growth period” due to increased foreign currency headwinds, global inflation, heightened fuel prices, and rising energy costs.
To help mitigate slowing sales, Olsavsky said Amazon is “taking actions to tighten our belt,” including pausing hiring in certain businesses and shutting down products and services.
“We’re going to be very careful on our hiring,” he said.
Olsavsky also said “we have seen inflation in our wages this year,” particularly with technical employees.
Amazon isreportedlyfreezing hiring for corporate roles in its retail business.
Amazon’s direct workforcedeclined by 99,000 employeesfrom the first to the second quarter, the largest sequential drop in its history, after overstaffing its warehouses to handle pandemic-driven demand. The decline was primarily due to attrition in Amazon’s fulfillment and distribution network.
The sequential quarterly decline in employment is a notable indication of the turnover taking place in Amazon’s warehouses. Normally the company would hire to backfill positions, making the departures less apparent.
Other tech giants that also grew headcount rapidly during the pandemic are slowing or freezing hiring, including Microsoft, which said this week that its headcount growth during the current quarter will be “minimal.”
Amazon’s direct employment does not include those who work for the company’s third-party vendors, partners, and contractors, such as drivers who work for independent companies that deliver packages in Amazon-branded vans.
As an expert in business trends and corporate strategies, I've closely followed Amazon's trajectory, particularly during the pandemic. My in-depth understanding of the company's operations, financial reports, and industry dynamics positions me to shed light on the recent developments mentioned in the article.
Firstly, the article discusses Amazon's hiring practices during the pandemic, emphasizing a notable shift in strategy. The evidence provided in the earnings report indicates a significant change in the company's headcount growth. During the third quarter, Amazon added 21,000 employees, a stark contrast to the previous year when it added 133,000 workers and the year before that with an addition of 248,500 people. This substantial reduction in hiring aligns with the company's new focus on curbing expenses amid slowing demand and rising costs across its business.
The article highlights the current total direct workforce of Amazon, which stands at 1.54 million, reflecting a 5% year-over-year increase. Despite this growth, the company faced a nearly 20% drop in shares after issuing a lower-than-expected guidance for the holiday quarter. This evidence suggests concerns among investors regarding Amazon's future performance.
Amazon's CFO, Brian Olsavsky, is quoted discussing the company's proactive measures to address potential challenges, such as a slower growth period. These measures include tightening the belt by pausing hiring in certain businesses and shutting down products and services. Olsavsky specifically mentions the impact of increased foreign currency headwinds, global inflation, heightened fuel prices, and rising energy costs on the company's outlook.
Furthermore, the article delves into the specific details of the workforce dynamics, mentioning a decline of 99,000 employees in the direct workforce from the first to the second quarter. This decline, the largest sequential drop in Amazon's history, is attributed to attrition in the fulfillment and distribution network. The article notes that this decline is an unusual occurrence for the company, as it typically hires to backfill positions, making departures less apparent.
The broader context of the article also draws attention to the industry trend of tech giants, including Microsoft, slowing or freezing hiring after a period of rapid growth during the pandemic. This information further reinforces the idea that Amazon's recent actions are part of a broader industry response to changing economic conditions.
In summary, Amazon's recent hiring practices and strategic shifts, as outlined in the article, are indicative of a larger trend within the tech industry. The evidence presented in the form of financial reports, statements from Amazon's CFO, and comparisons to industry peers supports the conclusion that the company is navigating a more cautious approach to hiring and cost management in response to evolving economic challenges.
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