Amazon Starts Round of Layoffs in AWS Cloud Division

(Bloomberg) — Amazon.com Inc. has started laying off employees in its cloud services operation amid slowing sales growth in its most profitable division.

Amazon Web Services personnel in the US, Canada and Costa Rica whose jobs were being eliminated were notified early Wednesday, the unit's chief said in an email to staff. AWS generates most of the company's profits but is experiencing slowing growth as corporate customers look to trim expenses.

Overall, Amazon is axing 27,000 mostly corporate positions after a hiring spree during the pandemic left the company with too many people. Having wrapped up a round of job cuts earlier this year that totaled about 18,000 workers, Amazon announced another 9,000 layoffs in March, which Chief Executive Officer Andy Jassy said would land on AWS, human resources, advertising and the Twitch livestreaming service. Cuts were rolled out in recent weeks in areas including Twitch and the company's video game group.

"It is a tough day across our organization," AWS chief Adam Selipsky said in the email reviewed by Bloomberg.

AWS, like much of the rest of Amazon, expanded its headcount rapidly as the pandemic boosted demand for digital services. 

"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 said. "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."

Related:4 Reasons Why AWS Could Lose Its Dominant Cloud Market Share

Selipsky added that cuts in regions outside North America would roll out following local processes, including consultations with employee groups where mandated by law.

Some AWS-related teams had already been hit by layoffs, including recruiters and members of the "Just Walk Out" physical stores technology group that joined the division in a reorganization last year. But the first rounds of cuts landed heaviest on the company's recruiting and human resources teams, its sprawling retail group and devices teams.

Wednesday brought more cuts to Amazon's beleaguered HR group, which has been subject to waves of buyout offers and cuts that began in November.

Beth Galetti, who leads the People Experience and Technology team, as Amazon calls HR, announced the latest set of cuts in an email Wednesday. "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," she said.

An Amazon spokesperson declined to comment on the latest layoffs, referring back to Jassy's email in March saying that they would be coming.

Amazon has instituted a hiring freeze for jobs outside its warehouses and delivery operations — with exceptions for certain projects and jobs — and managers say it's not clear when the company might begin hiring en masse again.

Amazon employed 1.54 million people worldwide at the end of December. The vast majority of those workers are hourly employees who pack and ship products in warehouses. Before the first round of layoffs began in November, the company said it had roughly 350,000 corporate employees.

Other tech giants have also reduced their headcount, including Meta Platforms Inc., Google parent company Alphabet Inc., Microsoft Corp., Dell Technologies Inc. and International Business Machines Corp.

Amazon is scheduled to report financial results on Thursday, and investors will be watching to see if cost-cutting measures have helped profitability and whether cloud services sales growth is bottoming out.