Amazon layoffs to raise recession fears for tech sector

The massive job cuts by Amazon.com Inc hints that the layoff could stretch throughout the tech sector in 2023 as companies race to cut costs. Tech companies shed more than 150,000 workers in 2022, as the pandemic-driven demand boom shatters.

During the pandemic, companies ramped up their hiring process. However, in 2022, the situation reversed, with the tech sector leading the job cuts, which reportedly surged 649% from 2021. The drop in demand amid a steep rise in borrowing costs has led several executives from the sector to admit they hired in excess during the COVID-19 crisis.

For Amazon, growth in its cloud unit that brings most of its profit has slowed as businesses cut back spending, while its online retail unit is faltering from strained consumer budgets due to rising prices. Meta Platforms Inc sacked 11,000 jobs last year, with Chief Executive Mark Zuckerberg saying he had wrongly expected that the pandemic boom would keep on going.

Tech giants Microsoft and Google-parent Alphabet have already hinted about cost-cuts, including layoffs. Salesforce Inc’s Marc Benioff said that the enterprise software company had hired “too many people” as he announced plans to cut 10% of the jobs.