Amazon's Massive Job Cuts Hint at More Pain for Tech Sector in 2023 Amid Recession Fears

Technology firms shed more than 150,000 workers in 2022, as a demand boom during the COVID-19 pandemic rapidly turned into bust.

By Reuters | Updated: 6 January 2023 12:55 IST

Amazon's Massive Job Cuts Hint at More Pain for Tech Sector in 2023 Amid Recession Fears

Photo Credit: Reuters

Several tech companies have admitted hiring in excess during the COVID-19 crisis

Highlights

Job cuts in 2022 surged 649 precent from 2021, led by tech companies
Drop in demand, rise in interest rates seen as major contributors
Meta, Microsoft, Alphabet, Salesforce are also laying off employees

The massive job cuts by Amazon, one of the biggest private employers in the US, show the wave of layoff sweeping through the tech sector could stretch into 2023 as companies rush to cut costs, analysts said on Thursday.

As a demand boom during the pandemic rapidly turns into bust, tech companies shed more than 150,000 workers in 2022, according to tracking site Layoffs.fyi, a number that is growing as growth in the world's biggest economies start to slow.

"More layoffs are certainly possible ... given the scale of investment we saw in 2020-21, we would probably think that some degree of caution is probably appropriate," said Russ Mould, investment director at AJ Bell.

Samsung Wins Patent for a Tri-Fold Smartphone With Specialised Barrier Layer for Improved Durability

Coming out of a global pandemic, job cuts in 2022 surged 649 percent from 2021, led by for technology companies, according to executive coaching firm Challenger, Gray & Christmas.

The drop in demand amid a steep rise in borrowing costs has led several executives from the sector to admit they hired in excess during the COVID-19 crisis.

Meta axed 11,000 jobs last year, with Chief Executive Mark Zuckerberg saying he had wrongly expected that the pandemic boom would keep on going.

Amazon Working on Standalone App for Sports Content: Report

Tech giants Microsoft and Google-parent Alphabet have already hinted at cost-cuts, including layoffs.

Salesforce top boss Marc Benioff said on Wednesday the enterprise software company had hired "too many people" as he announced plans to cut 10 percent of the jobs.

For Amazon, growth in its cloud unit that brings most of its profit has slowed as businesses cut back spending, while its online retail unit is reeling from strained consumer budgets due to rising prices.

Ola, Uber, Dunzo, Provide Poor Working Conditions for Workers: Report

The growing crisis has brought back memories of the dot-com bubble at the start of the century and the 2008 financial crisis when tens of thousands lost jobs.

"Some of us will remember 2000 to 2003 after a massive bubble fed by cheap money, high investor expectations and plentiful cash," said Mould. "Whether we see a repetition or not will be very interesting as there is a danger of that."

5G is now available both on Android and iPhone in India. But is it any good? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.