Amazon Web Services CEO Adam Selipsky and human resources head Beth Galetti sent notes to staffers in the U.S., Canada and Costa Rica informing them of the job cuts.
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“It is a tough day across our organization,” Selipsky wrote in the memo.
The layoffs are part of the previously announced job cuts that are expected to affect 9,000 employees. Last week, Amazon laid off some employees in its advertising unit, and it has let go of staffers in its video games and Twitch livestreaming units in recent weeks.
Amazon wrapped up a separate round of cuts earlier this year that affected approximately 18,000 employees. Combined with the cuts this month, it marks the largest layoffs in Amazon’s 29-year history.
Amazon CEO Andy Jassy has been aggressively slashing costs across the company as the e-retailer reckons with an economic downturn and slowing growth in its core retail business. Amazon froze hiring in its corporate workforce, axed some experimental projects and slowed warehouse expansion.
By announcing layoffs in ads and AWS, Jassy has shown that two of Amazon’s biggest and most profitable businesses aren’t immune to the cost-cutting. Both AWS and ads have experienced slowing growth in recent months as companies trim their spending amid a challenging economic environment.
Some teams within AWS were included in the earlier round of layoffs. A portion of the cuts on Wednesday is expected to land in AWS’ professional services arm, which helps customers troubleshoot issues with their cloud infrastructure, according to a current employee, who asked to remain anonymous because they weren’t authorized to speak on the matter.
Headcount in AWS ballooned during the pandemic, which proved to be a massive boon for Amazon and other cloud providers, as companies, government agencies and schools sped their transition to the cloud.
“Given this rapid growth, as well as the overall business and macroeconomic climate, it is critical that we focus on identifying and putting our resources behind our top priorities — those things that matter most to customers and that will move the needle for our business,” Selipsky wrote in the memo. “In many cases this means team members are shifting the projects, initiatives or teams on which they work; however, in other cases it has resulted in these role eliminations.”
Amazon will report first-quarter earnings after the bell on Thursday. Investors will look for any insight into whether Jassy’s cost-cutting efforts have improved profitability, and when Amazon executives expect AWS growth to reaccelerate.
Shares of Amazon surged 3.2% in mid-morning trading on Wednesday.
Here’s the full memo from Selipsky:
As you know, we recently made the difficult decision to eliminate some roles across Amazon globally, including within AWS. I wanted to let you know that conversations with impacted AWS employees started today, with notification messages sent to all impacted employees in the U.S., Canada, and Costa Rica. In other regions, we are following local processes, which may include time for consultation with employee representative bodies and possibly result in longer timelines to communicate with impacted employees.
It is a tough day across our organization. I fully realize the impact on every person and family who is affected. We are working hard to treat everyone impacted with respect, and to provide a number of resources and touchpoints to aid in this transition. This also includes packages that include a separation payment, transitional health insurance benefits, and external job placement support.
To those to whom we are saying goodbye today, thank you for everything you have done for this business and our customers. I am truly grateful. To all AWS builders, thank you for your compassion and empathy for your colleagues.
Both the size of our business and the size of our team have grown significantly over recent years, driven by customer demand for the cloud and for the unique value AWS provides. This growth has come quickly as we’ve moved as fast as we could to build what customers have needed. Given this rapid growth, as well as the overall business and macroeconomic climate, it is critical that we focus on identifying and putting our resources behind our top priorities–those things that matter most to customers and that will move the needle for our business. In many cases this means team members are shifting the projects, initiatives or teams on which they work; however, in other cases it has resulted in these role eliminations.
The fundamentals and the outlook for our business are strong, and we are very confident in our long-term prospects. We are the leading cloud provider by a wide range of benchmarks, from our feature set to our security capabilities to our operational performance. We are focused on continuing to innovate in the areas that matter most to our customers as we help them minimize expense, innovate rapidly, and transform their organizations.
I am optimistic about the future. We’ll tackle our opportunities and our challenges, and continue to change the world.
And here’s the full memo from Galetti:
As Andy shared a few weeks ago, leaders across the company have worked closely with their teams to decide what investments they are going to make for the future, prioritizing what matters most to customers and the long-term health of our businesses. Given PXT’s close partnership with the business, these shifts impact our OP2 plans as well, and we have made the difficult decision to eliminate additional roles within the PXT organization.
Today we shared this update with our PXT colleagues whose roles were impacted across the U.S., Canada, and Costa Rica. In other regions, we are following local processes, which may include time for consultation with employee representative bodies and possibly result in longer timelines to communicate with impacted employees.
These decisions are not taken lightly, and I recognize the impact it will have across both those transitioning out of the company as well as our colleagues who remain.
To those leaving, I want to say thank you for your contributions. You’ve helped build Amazon into the extraordinary company it is today, and we are here to support you during this difficult time. In the U.S., we are providing packages that include a 60-day, non-working transitional period with full pay and benefits, plus an additional several weeks of severance depending on tenure, a separation payment, transitional benefits, and external job placement support.
While this moment is hard, I remain energized by the important work that lies ahead of us. Together, we are building a workplace that helps fuel how Amazonians invent and deliver for customers. From making it easier for employees to find the information and help they need, to expanding our benefits, I am proud of the progress we’ve made over the last few years. This meaningful work is a direct reflection of PXT’s perseverance, resilience, and leadership. Thank you.
Please know that the entire PXTLT, including myself, is here to answer your questions and support you.