Dive Brief:
- Amazon is pausing hiring in its corporate workforce “for the next few months” in light of an uncertain economy, according to a company blog post from Beth Galetti, Amazon’s senior vice president of people experience and technology.
- The e-commerce giant last month said it would freeze corporate hiring in its retail operations, and the decision to pause on new incremental hires more widely came from CEO Andy Jassy and senior leadership, per Galetti’s post.
- The company will replace some employees who leave and hire new ones in some areas, Galetti said. “We still intend to hire a meaningful number of people in 2023, and remain excited about our significant investments in our larger businesses ” and new initiatives, she said.
Dive Insight:
These may be temporary halts to hiring at Amazon, and they reflect what Galetti described as “an unusual macro-economic environment.”
“This is not the first time that we’ve faced uncertain and challenging economies in our past,” she said. “While we have had several years where we’ve expanded our headcount broadly, there have also been several years where we’ve tightened our belt and were more streamlined in how many people we added.”
But these announcements also illustrate how much Amazon itself has gone from being a fast-growing disruptor to a more cautious corporation, according to GlobalData Managing Director Neil Saunders. Founder and former CEO Jeff Bezos once famously boasted that he “made billions of dollars of failures” at Amazon because taking big chances led to green shoots and ultimately major successes.
“It used to be the case that not a week would go by without Amazon announcing some kind of new initiative or plan for growth,” Saunders said in emailed comments. “However, over the course of this year that expansionary outlook has disappeared and has given rise to a more contractionary mindset.”
The company last week warned that it might notch zero profits in Q4. Late in the third quarter sales slowed, and the company’s attempt at a second Prime sale in October, while it raked in billions, was nevertheless disappointing. In Q3 operating income declined 48% to $2.5 billion and net income fell 9% to $2.9 billion, with the North America segment swinging to a $412 million loss.
Amazon’s effort to rein in costs is unsurprising given these struggles with profitability, and prudent given the economy, but the company needs to be careful about its pivot, according to Saunders.
“While we do not see Amazon’s move as being detrimental – especially since it is already well staffed with plenty of talent – it will need to take a view on how much further it wants to cut and hold,” he said. “[The] necessity is to balance Amazon’s traditional experimental approach and tolerance of some failure with the need to deliver good returns. This will be a challenging equation for the retail giant to get right.”
