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Amazon Job Cuts Signal Tech Sector Hurting More in 2023

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Massive job cuts done by Amazon.com, one of America’s largest private employers, represent the surge in layoffs across the tech sector, indicating that may happen well into 2023 as businesses hurry to cut costs, as per analysts.

The demand surge during the COVID-19 lockdowns is quickly tanking, with tech companies laying off over 150,000 in 2022, according to Layoffs.fyi. This number is projected to swell as growth in the world economy has started to slow down.

The wave of layoffs is reminiscent of the dot-com bubble as the 2000s rolled and of the 2008 financial crisis when tech businesses were forced to cut jobs to reduce spending.

Greg Selker, Stanton Chase’s managing director, said, “They’re trying to protect themselves so that they’re not caught in the 2008-2009 cycle that we had.”

As the pandemic ravages the world, companies increased hiring only to do the exact opposite in 2022, with the tech industry having the most job cuts. According to Challenger, Gray & Christmas, Inc., an executive coaching firm, it went up to 649% in 2021.

Selker noted, “It is also giving them an advantage to frankly be more responsible for some of the aggressive hiring that occurred during the pandemic.”

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Demand tanked as a surge in borrowing costs made several tech executives admit an excess in hiring during the pandemic.

In 2022, Mete Platforms Inc cut 11,000 jobs. Regarding this, Meta CEO Mark Zuckerburg admitted that he had wrongly expected that the boom during the pandemic would continue.

Microsoft and Alphabet, Google’s parent company, have already hinted at cutting costs, including layoffs.

On Wednesday, Mark Benioff of Salesforce Inc also said that his company had hired “too many people,” and mentioned plans of axing 10% of the jobs.

For Amazon, however, the growth brought in by its cloud unit, which makes up the biggest bulk of the company’s profit, has slowed. Meanwhile, its online retail sector is also suffering due to less consumer spending caused by higher prices.

AJ Bell investment director Russ Mould said, “Some of us will remember 2000 to 2003 after a massive bubble fed by cheap money, high investor expectations and plentiful cash.”

Bell added, “Whether we see a repetition or not will be very interesting as there is a danger of that.”

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