Amazon chief executive Andy Jassy wrote in a message to employees that most of the cuts would occur in the company’s retail and human-resources divisions.
“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” Jassy wrote.
Amazon said it would tell some employees affected by the cuts beginning Jan. 18. (Amazon founder Jeff Bezos owns The Washington Post.)
Amazon’s news came just after the cloud-computing giant Salesforce said it would lay off thousands of employees. Like many tech companies, it is dealing with waning growth after booming sales during the pandemic.
The news from Amazon and Salesforce is the latest development in a growing list of Big Tech companies that have slashed their workforces ahead of a possible recession. Facebook parent Meta announced last fall that it would lay off 11,000 employees, and the video streaming company Vimeo said Wednesday that it would lay off about 11 percent of its staff, or about 140 people, “due to the uncertain economic environment.” Other Big Tech companies have instituted hiring freezes — all a dramatic turnabout from the past decade of explosive growth in Silicon Valley.
Salesforce, which owns the popular workplace chat tool Slack and counts Ford, GE Appliances and Humana among its customers, will cut 10 percent of its workforce and scale back its office space to reduce costs, the company said Wednesday, adding thousands of workers to the expanding group of tech workers laid off in recent months.
“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” Salesforce co-chief executive Marc Benioff wrote in an email to employees announcing the cuts.
The software maker, whose tools for sales and customer service have made it one of the most high-profile cloud-computing companies, has more than 79,000 employees, meaning the layoffs could affect nearly 8,000 people. In addition to Benioff’s email, the company revealed the layoff plans in a regulatory filing.
Amazon starts widespread layoffs in corporate ranks
Salesforce said it would also pare back its office space as part of its plan to reduce costs, including “select real estate exits.” The company’s headquarters is in the tallest building in San Francisco, called Salesforce Tower. It did not specify whether the tower would be affected by the reduction plans, and representatives declined to provide further details beyond what was mentioned in the filing and Benioff’s email.
Salesforce grew its employee base significantly during the pandemic, skyrocketing from more than 49,000 at the end of January 2020 to more than 79,000 now. Even after the cuts, it will have more employees than it did when the coronavirus pandemic started.
Salesforce, like many of its fellow tech giants, has been dealing with slowing sales growth. Its other co-CEO, Bret Taylor, recently announced that he will leave the company at the end of this month. He also served as chairman of Twitter for much of this year, before Elon Musk bought the company and the board was disbanded.
Salesforce’s revenue growth rate slowed to 14 percent last quarter. The company’s stock dropped nearly 50 percent last year, as tech stocks sustained a dismal year amid slowing growth and economic uncertainty.
Shareholders rewarded Salesforce’s plan to cut costs Wednesday, and the stock rose more than 2 percent.
“This is a smart poker move by Benioff to preserve margins in an uncertain backdrop as the company clearly overbuilt out its organization over the past few years along with the rest of the tech sector with a slowdown now on the horizon,” Wedbush Securities analysts Dan Ives and John Katsingris wrote in a note Wednesday morning.
Salesforce said some employees who were being laid off would get an email Wednesday morning and would hear from company leadership. Employees in the United States would get nearly five months of severance pay and benefits, Benioff wrote in his email.
Benioff is known for his activism and donations to help homeless populations, and for fostering Salesforce’s “Ohana” culture, using a Hawaiian word for family.
“The employees being affected aren’t just colleagues. They’re friends. They’re family,” he wrote in his email to employees. “Please reach out to them. Offer the compassion and love they and their families deserve and need now more than ever.”
Some experts have cast staff reductions as a good thing for the tech industry — Silicon Valley firms grew so fast for so long that they needed some leveling out, they say. But they have left thousands of workers searching for jobs in an uncertain market.
Despite Big Tech’s stumbles and global economic uncertainty, job openings in the United States have remained fairly steady. The Bureau of Labor Statistics reported at the end of November that the number of job openings was “little changed” at 10.5 million.
So far, people laid off from the tech industry have largely found new jobs within a few months, according to ZipRecruiter, a job search site. But the newly laid-off workers might face increasing competition with other tech professionals for the best positions.
Some workers will find jobs within the tech industry, but others will need to look at retail, manufacturing, hospitality and other industries for work, said ZipRecruiter chief economist Julia Pollak.
“For workers who want re-employment in tech, they’re going to have a harder time and a much more competitive environment,” she said. “I expect it will get a little worse before it gets better.”
That could be especially true for people laid off from the industry in nontechnical roles, such as recruiting or parts of marketing. Pollak notes that many companies conduct layoffs in December and January, which are also generally slower months for hiring, compounding the searches.
But, she said, many tech companies are still hiring in certain areas despite the cuts, and many other industries are hungry for tech talent.
Twitter cut about half of its workforce when Musk took over the company. Added to the cuts from Meta, Amazon, Lyft, Netflix, Shopify and many others, tens of thousands of tech workers have been left looking for jobs in the past year, in a market that was once a sure bet for employment.
Shira Ovide contributed to this report.