Amazon to review unprofitable business units in cost-cutting push

Amazon is to conduct a cost-cutting review aimed at trimming back unprofitable business units amid a broader slowdown in the global tech sector, the Wall Street Journal reported on Thursday.

It follows an announcement last week that the ecommerce and tech behemoth would pause hiring across its global corporate workforce in a bid to cut costs.

The Wall Street Journal reported that among the units to be reviewed are Amazon’s devices business and its Alexa voice assistant business.

When approached by The Irish Times, the company did not provide a breakdown of Amazon’s Irish headcount and the distribution of workers based in the State across the various business units.

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However, the company, which opened its first Irish warehouse, or “fulfilment centre”, in Baldonnell Business Park in Dublin in September, said last year that the new facility would create 500 jobs, bringing its Irish headcount to 5,000.

A spokeswoman for Amazon Ireland said the review is “part of our annual operating plan review, which occurs in the fall each year”.

“As part of this year’s review, we are of course taking into account the current macro-environment and considering opportunities to optimise costs,” she said.

Asked what the review could mean for the future of Amazon’s Irish operations, the spokeswoman said: “We remain excited about the future of our larger businesses, as well as newer initiatives like Prime Video, Alexa, Grocery, Kuiper, Zoox and Healthcare.”

She said the company also remains optimistic about the future of the Alexa product, which “remains an important part of the business and area of investment of Amazon”.

Is the tech crunch a correction or a calamity?

Listen | 31:53

The job losses announced by Meta and Stripe may provide an indication of layoffs across the tech sector. Inside Business is analysing the impact of the redundancies, announced over the past week, across the wider Irish economy. After enjoying bumper profits and a surge in recruitment during the pandemic, interest rate rises and the cost of living crisis have finally caught up with the tech giants. But is the crunch merely a recalibration of the sector or a more foreboding warning of global recession? Ciaran Hancock, Cliff Taylor and Laura Slattery analyse how prepared we are to absorb the losses, what the impact on the commercial property market will be and does the IDA have a Plan B should the multinationals pare back significantly.

Last month, Amazon said consumer spending was in “uncharted waters”, becoming the latest big tech company to warn of slower growth and higher costs.

Poor performance by its core retail unit has led Amazon to backtrack on its aggressive logistics expansion plans. It has paused, or cancelled operating, at least 50 US warehouses, according to data from logistics analyst Marc Wulfraat. It has also reduced its workforce from a high of 1.62 million in March this year to 1.55 million at the end of September.

The company’s share price, down about 45 per cent in 2022, climbed as much as 11 per cent in trading following the Wall Street Journal report on Thursday.

The news comes in a grim week on the jobs front within the ecosystem of global tech companies based in Ireland. The Government is to bring forward revisions to the State’s enterprise policy in a white paper as soon as next month following considerable job losses at Twitter, Meta owner Facebook and Zendesk since the start of November. – Additional reporting: Copyright The Financial Times Limited 2022