HomeUSACost-cutting review reveals economic uncertainty

Cost-cutting review reveals economic uncertainty

Andrew Ross Sorkin speaks with Amazon CEO Andy Jassy during the New York Times DealBook Summit in the Appel Room at the Jazz At Lincoln Center on November 30, 2022 in New York City.

Michael M. Santiago | Getty Images

Amazon CEO Andy Jassy has been entrenched in a sweeping review of the company’s expenses, marked with the largest job cuts in its history, shuttered programs and a pause on warehouse expansion.

Speaking at The New York Times DealBook Summit on Wednesday, Jassy said a monthslong cost-cutting review revealed the economy was “more uncertain” than previously thought, which prompted the company to escalate its efforts to rein in expenses.

“We were seeing things that were different from what we’ve seen before, and we just felt like we needed to streamline our costs,” Jassy said.

Earlier this month, Amazon began letting go of employees in several divisions, including human resources, and devices and services. The company is expected to cut as many as 10,000 jobs, though the number remains fluid because the decisions are being made on a business-by-business basis.

The pain isn’t likely to end soon. Jassy confirmed Amazon, which counts 1.6 million employees globally, will continue to lay off employees into the new year, while some teams were offered buyouts in anticipation of involuntary layoffs in the coming months.

Jassy said Wednesday that Amazon decided the layoffs were necessary after it froze hiring in its corporate workforce.

“As we went through the plans, we realized we needed to be more slim on some of our resources,” he added.

Amazon’s Alexa voice assistant unit was among the divisions hit hardest. Alexa was once considered key to the company’s future, with Amazon assigning 10,000 employees to work on the technology and Echo smart speakers. But questions have grown inside the company around the future of Alexa, according to The Wall Street Journal, in a report that said consumers appear to only use the service for a handful of functions, and after heavy investment, the unit lost more than $5 billion annually in recent years.

Business Insider¬†also reported on the future of Amazon’s Alexa unit being in jeopardy.

Asked about reports of Alexa’s flawed business model, Jassy retorted, “You have to be careful what you believe in what you read. I think there was some misreporting that was going on in the last few weeks.”

Spokespeople for the Journal and Business Insider did not immediately respond to a request for comment on Jassy’s remark.

Jassy said he’s “really pleased and optimistic” about Amazon’s devices business, adding that Alexa has gotten “a lot of traction,” particularly in driving e-commerce purchases.

Amazon has bet heavily on a future where consumers will increasingly use their voice to buy products on its website. It’s said millions of products can be ordered through Alexa.

For now, voice shopping still appears to be a novelty. The Information reported in 2018 that only a fraction of Alexa users shop through it, and many who have shopped using Alexa have declined to use it a second time to make a purchase.

WATCH: Amazon CEO Andy Jassy on shifting consumer spending habits

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