Amazon CEO says company likely to slow hiring rate • The Register

Amazon CEO Andy Jassy says the parent company of the world’s largest cloud service provider is likely to slow hiring rates, while noting he has no plans to force current employees to return to the office.

jassie said Code conference last night in Los Angeles: “We don’t have a plan to require people to come back… But we will be adaptive as we learn.”

He also written down at the same conference that he didn’t think “we’ll be hiring at the same rates as we are,” adding, “But we will be hiring.”

In July, Amazon suspended construction on six new office buildings in Bellevue and Nashville, and said it needs to “re-evaluate” the designs to make them suitable for hybrid work.

John Schoettler, Vice President of Global Real Estate and Facilities at Amazon, said Reuters then: “The pandemic has changed the way people work… Our offices are long-term investments and we want to make sure we continue to design them to meet the needs of our people going forward.”

That was the same month that the retail and cloud juggernaut reported earnings Q2 2022where CFO Brian Olsavsky, when asked about a quarter-over-quarter headcount decline, said the company “added 14,000 new employees in the first quarter,” and acknowledged that we had “reduced our net headcount by 27,000 in the prior year.”

He added, “I’d like to note that we’re still up 188,000 year-on-year and have almost double the number of employees we had in early 2020 before the pandemic… Right now we’re seeing the workforce stabilizing.”

The move away from committing to office space and the reported moves to reduce storage space are historically relevant inflation that has impacted consumers’ purchasing decisions and impacted Amazon’s core e-commerce business.

The group has come off a two-year high of record-breaking pandemic profits as locked-down households turned to online shopping. In its latest numbers, however for the second quarter of 2022 ended in June, it reported a net loss of $2 billion. The cloud division continued to perform well, growing revenue 33 percent to $19.73 billion and reporting operating income of $5.715 billion, an increase of more than 36 percent. Much of the group’s net loss for the quarter could be attributed to paper losses at its stake in electric vehicle maker Rivian ($11.5 billion for the first two quarters of 2022), but compared to the $7.778 billion at Net profit it earned in the same quarter of 2021 the contrast was stark.

The impact of the company’s sales during Prime Day 2022 won’t be seen until Q3 is reported.

Jassy, ​​who is tasked with cutting costs, said of second-quarter earnings that Amazon was making “progress on the more controllable costs, despite ongoing inflationary pressures on fuel, energy and transportation costs.”

It’s apparently not the only conservative real estate move Amazon has made of late. Last WeekConsulting firm MWPVL International Inc claimed that Amazon is scrapping plans to build multiple warehouses in the US amid slowing sales growth.

Amazon reportedly took action in May to shed at least 10 million square feet of warehouse space due to slow growth and weak earnings prospects, which it attributed build over. Sources told Bloomberg that there are plans to sublet the existing space and terminate some of the leases where it is the lessee.

Salesforce has also taken steps to reduce its real estate costs in light of the shift to hybrid working and over the past year terminated the lease for an undeveloped 325,000 square foot (30,193 m²) tower. In June, CEO Marc Benioff said a forced return to old normal would be folly, saying: “Office mandates will never work.”

An Amazon spokesperson told us, “Amazon is a dynamic company and we consider a variety of factors when deciding where to develop future websites or maintain a presence to best serve our partners and customers. We’re constantly making adjustments to our network to best fit our business needs and improve the experience for our employees, partners, drivers and customers. While we are closing some of our older locations, we are also improving some of our facilities and continue to open new locations. In fact, since 2020, we’ve added more than 350 new modern facilities to our network in the US alone, and dozens more facilities under construction here in the US and around the world.” ®