Why Amazon’s layoffs point to more pain for the tech sector in 2023

The massive job cuts at Amazon, one of the largest private employers in the US, show the layoffs sweeping the tech sector could last into 2023 as companies rush to cut costs, analysts said on Thursday.

As demand boom quickly turns into bust during the pandemic, tech companies are laying off more than 150,000 employees in 2022, according to tracking site Layoffs.fyi, a number that’s growing as growth slows in the world’s largest economies.

“More layoffs are certainly possible…given the scale of investment we’ve seen in 2020-21, we’d probably think some level of caution is warranted,” said Russ Mold, investment director at AJ Bell.

In the wake of a global pandemic, job cuts surged 649 percent in 2022 from 2021, led by tech companies, according to executive coaching firm Challenger, Gray & Christmas.

Falling demand amid soaring borrowing costs has led several industry executives to admit they have been hiring too much during the COVID-19 crisis.

Meta cut 11,000 jobs last year, along with the chief executive Mark Zuckerberg He was wrong to expect that the pandemic boom would continue.

tech giants Microsoft and Google parents Alphabet has already hinted at cost cuts, including layoffs.

Foreclosure Top CEO Marc Benioff said on Wednesday the enterprise software company had hired “too many people” as he announced plans to cut 10 percent of the workforce.

For AmazonGrowth at its cloud unit, which generates most of its profits, has slowed as companies cut spending, while its online retail unit is suffering from strained consumer budgets due to rising prices.

The growing crisis has brought back memories of the dot-com bubble at the turn of the century and the 2008 financial crisis, when tens of thousands lost their jobs.

“Some of us will remember 2000-2003, after a massive bubble fueled by easy money, high investor expectations and plenty of cash,” Mold said. “Whether we see a repeat or not will be very interesting as there is a risk.”

© Thomson Reuters 2023