Amazon’s AWS Layoffs: 5 Things To Know About ‘Devastating’ Cuts

From the number of potential AWS employees being laid off to AWS being the major profit driver for Amazon, CRN breaks down five things to know from Amazon’s 9,000 layoff announcement today.

Amazon Web Services, the $85 billion worldwide leader in cloud computing, is laying off a sizeable number of employees which could have a “devastating” impact on AWS, according to AWS partners.

“This could be the biggest layoff round ever at AWS. That’s somewhat scary for us as a partner, and could be devastating for AWS from an innovation or even a competitive perspective,” said one CEO from a national solution provider that did not want to be named, whose primary vendor partner is AWS. “We like everyone else want to know more information as soon as possible, but this is new news even for our channel account manager who we just reached out too.”

Amazon CEO Andy Jassy, who was previously CEO of AWS until 2021, disclosed today that the company will be cutting a total of 9,000 employees primarily from its AWS, PXT, advertising and Twitch organizations.

“This was a difficult decision, but one that we think is best for the company long term,” said Jassy.

Amazon Layoffs

In January, Amazon unveiled it would lay off 18,000 employees. CRN learned at the time that AWS would not be greatly affected by the round of layoffs. However, Amazon’s newest layoff round will undoubtedly affect AWS employees.

Within the first few months of 2023, Amazon will have terminated a whopping 27,000 employees with at least hundreds, if not potentially thousands, coming via AWS.

Monday’s announcement of 9,000 layoffs at Amazon is hardly the first major layoff round in the tech industry this year. For example just last week, social media giant Meta unveiled it will be laying off another 10,000 employees. This is on top of the 11,000 employees Meta already terminated in late 2022.

One partner told CRN he sees these layoffs as a potential opportunity for AWS to lean more into AWS partners.

“This is an opportunity for AWS to have even greater ‘partner obsession’ and leverage the channel as the growth engine going forward,” said one executive from a solution provider and AWS partner based in the Northeast.

CRN breaks down five things AWS employees, partners and customers need to know about Amazon’s newest layoff round that will hit AWS.

AWS Declines To Disclose Layoff Numbers

AWS confirmed to CRN that there would be layoffs at the company.

However, when questioned about how many AWS employees would be affected by the 9,000 round of layoffs, AWS declined to comment.

Additionally, AWS declined to say which AWS departments or business units would be affected in Amazon’s latest layoff round.

“Unfortunately, we don’t have any additional details to share, i.e. breakdown by business, at this time,” AWS said in an email to CRN.

Parent company Amazon has approximately 1.5 million employees on a worldwide basis. However, Amazon has never broken down how many of its employees specifically work inside AWS, only that the number is around the tens-of-thousands.

There were currently about 800 jobs openings at AWS across the globe as of Monday, according to AWS’ website.

AWS Is The Profit Driver For Amazon

AWS is the most profitable businesses across Amazon.

In its most recent fourth quarter 2022, Amazon’s operating income was $2.7 billion, while AWS’ operating income was $5.2 billion for the fourth quarter. In short, AWS is the main reason why Amazon wasn’t operating in the red during its most recent quarter.

For the entire 2022, Amazon sales increased only 9 percent compared to 2021, while AWS sales jumped nearly 30 percent annually to over $80 billion.

“From my point of view, laying off AWS employees doesn’t make sense for Amazon,” said one top executive from a regional solution provider who partners with AWS, who declined to be named. “It’s their most profitably businesses from my standpoint. And it’s how they lead from an innovation standpoint.”

“[AWS layoffs] doesn’t make too much sense to me from an operating standpoint. And it totally doesn’t make sense to me from an innovation standpoint,” he said.

Could Be AWS Largest Layoff Round Ever

Amazon CEO Andy Jassy said the 9,000 layoffs will affect four business segments: AWS, PXT, advertising and Twitch. AWS partners CRN spoke with said that if those layoffs are evenly distributed, approximately 2,250 AWS employees will be terminated.

It’s key to note again that when contacted by CRN, AWS declined to provide how many AWS employees will be terminated.

“I don’t remember AWS ever laying off thousands of employees in one single swoop or anything even remotely close to that,” said the national solution provider who has partnered with AWS for many years. “It will be interesting to see where they will cut like if sales or marketing is hit. Hopefully it’s not engineers. … There will be an impact to AWS if they fire 1,000 or 2,000 people over the next couple of weeks.”

AWS began offering IT solutions in 2006, with Andy Jassy helming the company basically since its inception until he was promoted to CEO of Amazon two years ago.

Parent company Amazon’s global workforce grew from around 800,000 employees in 2019 to over 1.6 million by the end of 2021.

Jassy said he still remains “very optimistic about the future” and opportunities for AWS.

Andy Jassy: Why Layoffs Are Happening; ‘Limited Hiring’ In Some Areas

Amazon CEO Andy Jassy said as part of the company’s annual planning process, leaders across the tech giant will work with their teams to decide what investments and priorities matter most to customers as well as long-term success.

“Given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount,” said Jassy.

The goal of this year’s annual planning, he said, was to be leaner while also enabling Amazon to still invest in the key long-term customer experiences.

“This initially led us to eliminate 18,000 positions (which we shared in January); and, as we completed the second phase of our planning this month, it led us to these additional 9,000 role reductions,” said Jassy. “Though you will see limited hiring in some of our businesses in strategic areas where we’ve prioritized allocating more resources.”

Jassy said decisions have been made around the 9,000 layoffs, which will be completed by mid- to late-April.

“It’s never easy to say goodbye to our teammates, and you will be missed,” he said.

AWS Layoffs Could Be A Channel Opportunity

Several partners CRN spoke with were nervous that AWS innovation and AWS cloud market dominance could be impacted by hiring hundreds, potentially thousands of AWS employees in 2023.

“You never want to hear about mass layoffs at AWS. I’m OK with hearing about layoffs at Amazon, but not AWS—there’s obviously a big difference,” said the national solution provider. “I don’t think there’s a need to panic right now because we don’t know how many people are being laid off [at AWS]. Is it 500 or 5,000, I don’t know. … I hope it’s not on the channel team.”

One regional solution provider and AWS partner based in the Northeast said the layoffs at AWS could potentially open up the door to more channel opportunities at AWS.

“From a channel perspective, it is an opportunity for AWS partners to play a bigger role in how AWS goes to market and services customers,” said the top executive from the AWS partner. “AWS is always talking about ‘customer obsession.’ This is an opportunity for AWS to have even greater ‘partner obsession’ and leverage the channel as the growth engine going forward.”