Cloud Jobs: Tech Sector Layoffs Hit Amazon Web Services, Microsoft Azure
The once seemingly untouchable cloud sector is suffering job losses, right along with everyone else.
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AWS remains the world’s largest public cloud provider (even as Microsoft Azure trails not far behind). Yet, as part of parent company Amazon, it, too, has fallen prey to tech sector layoffs. (Recall that Amazon early this month announced it will cut 18,000 jobs.)
This week, a quick LinkedIn search showed a number of AWS recruiters, from technical to military, and software developers, losing their jobs. One poster worked on the AWS traffic engineering team, an initiative to migrate services to native AWS. Another area that appears hard-hit is Amazon’s security and payment business. On that side, one software developer said his most recent project was leading the charge to make Venmo a payment method on Amazon.com. Business Insider on Jan. 18 posted an article reviewing all 35 groups at Amazon affected, including people within AWS’ People Experiences and Technology Solutions and the talent acquisitions groups.
From a corporate perspective, trimming the recruiter rolls makes sense. Amazon’s layoffs are intended, after all, to curb the overenthusiastic hiring conducted during COVID-19’s peak demand and momentum. Reducing the number of recruiters falls in line with the notion of adding fewer people to AWS.
Also, Amazon and AWS have remained under a hiring freeze since November, which coincides with the last round of Amazon layoffs. As such, Amazon is likely thinking that paying people not to do their jobs doesn’t make sense in the long term.
But there’s an even more unfortunate side to the layoffs at Amazon.
Perhaps the worst part of the layoffs, at least at Amazon, is that so many now-former employees say they learned of them via email rather than through one-on-one meetings or even phone calls. (Salesforce is guilty of this, too.) As Hyoun Park, CEO and chief analyst at Amalgam Insights wrote on LinkedIn earlier this month:
“One of the most frustrating things to me about the recent tech layoffs across Salesforce, Amazon, Twitter, etc… is that they are happening at some of the ‘most innovative’ companies in the world, yet the layoffs themselves are right out of the ‘best practices’ of the 1990s. After all the tech, diversity, equality, inclusion, efficiency and problem-solving capabilities we’ve figured out over the past 30 years, none of that has gone into making layoffs better and less painful. Every part of the process, down to the cookie cutter 10% cuts, feels like status quo thinking pushed down from last-gen B-schools ignoring both the humanity of the process & long-term goals of the company.”
Over at Microsoft, Azure software engineers and cloud solutions architects are reporting on LinkedIn they’ve lost their jobs.
Those posts come after Microsoft on Jan. 18 told the U.S. Securities and Exchange Commission it would shed “approximately 10,000 employees by the end of the third fiscal quarter of 2023.” The company’s most recent quarter will end on March 31.
Microsoft attributes its need for layoffs to changes to its hardware portfolio and the need to consolidate its office leases. There does seem to be more that Microsoft is considering, though, especially on the cloud side.
As Channel Futures’ sister site, Data Center Knowledge, wrote this week:
“This move by the cloud service provider giant aligns with signals of slowing demand for cloud services, as evidenced by a downgrade from UBS, competitors such as AWS reporting slowing growth, and heavy criticism around pricing of cloud services,” writes Lisa Sparks. “While the majority of pricing criticism is reserved for Azure’s primary competitor AWS, Azure has, at times, been looped in with these complaints.”
To be sure, cloud buyers are battling high inflation and interest rates, and looking to curtail spending wherever possible. That is impacting the cloud providers, and they are referring to those changes in various earnings calls.
Even as Microsoft reduces headcount by about 5%, CEO Nadella did say the company will continue to “invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company, while divesting in other areas.”
And there’s one more thing we noticed about Microsoft’s approach to layoffs.
Notably, unlike many affected AWS and Amazon staffers, Channel Futures did not spot Microsoft staff saying they found out about their layoffs through email.
In his Jan. 18 companywide memo, Microsoft CEO Satya Nadella said this: “[W]e will treat our people with dignity and respect, and act transparently.”
It seems Microsoft might be taking a different tack compared to Amazon and Salesforce.
On that note, what’s happening over at Google Cloud when it comes to layoffs?
The question underlying the layoffs at Amazon and Microsoft, until Friday, was how soon Google might follow suit. It didn’t take long.
The tech giant indeed announced a restructuring that will slash 6% of its workforce, or 12,000 employees. We don’t know yet how much of an impact that will have on Google Cloud. The move wasn’t unexpected, as the search behemoth had previously indicated a plan was in the works to push out thousands of “underperforming” workers. The analysts at Seeking Alpha predicted that reducing headcount could give Google “low-hanging fruit” to preserve and expand its profit margins.
As Seeking Alpha points out, Google’s stock in 2022 represented “one of the biggest decliners” among FAANG stocks.
“FAANG” refers to Meta (formerly Facebook, hence the F in “FAANG”), Apple, Amazon, Netflix and Alphabet (formerly Google, hence the G in “FAANG”). These stocks are considered the five-best performers in the American tech stocks in the market. Thus, investors and analysts look to them as harbingers of activity in the sector.
Google’s year-to-date gains “continue to lag behind peers,” per Seeking Alpha.
“Investor confidence in the stock has buckled at the sight of consecutive earnings misses and sales deceleration incurred at Google last year, while visibility on the company’s near-term outlook remains low, given inherent vulnerability to cyclical headwinds at its core advertising business,” Seeking Alpha notes.
Even as Google overall struggles, so, too, does its perhaps most promising division, Google Cloud.
For one thing, it remains the third-largest hyperscaler, so it faces headwinds against larger rivals AWS and Azure. That comes even as more enterprises round out their cloud computing strategies to incorporate more providers, so they don’t stop operating if one vendor has a failure. Such a multicloud approach helps organizations stay (or become) more agile, ensure greater reliability and improve cost efficiencies.
But that doesn’t mean they’re not finally paying attention to their cloud outlay and making adjustments. Because they are.
Another reason why Google’s layoffs might impact its cloud division ties to provisioning. This actually applies to all cloud providers, but it’s a graver danger for Google Cloud because its margins remain in the negative, according to Seeking Alpha.
What we’re talking about here is organizations’ understanding that it’s time to control and optimize cloud spend. For years, organizations, believing cloud would cost less than on-premises data centers, overprovisioned and overpaid, largely because they were not monitoring their outlay.
Now, as executives and shareholders demand greater spending accountability, cloud end users are paying closer attention to expenses and, in many cases, pulling back. Some amount of cloud provider layoffs come as a natural reaction to that shift.
Job cuts are happening across technology companies, including Salesforce, Meta, Oracle and others that don’t necessarily specialize in cloud. As one example, communications firm 8×8 just axed 7% of its staff, largely on the channel side, and endpoint protection vendor Sophos is reducing its workforce by 10%.
Channel Futures reports the latest news at this section of our website.
Job cuts are happening across technology companies, including Salesforce, Meta, Oracle and others that don’t necessarily specialize in cloud. As one example, communications firm 8×8 just axed 7% of its staff, largely on the channel side, and endpoint protection vendor Sophos is reducing its workforce by 10%.
Channel Futures reports the latest news at this section of our website.
Tech sector layoffs from pandemic-era overhiring continue at Amazon and Microsoft, and they’re spilling over into the cloud businesses. Furthermore, just announced Friday, Google says it’s cutting 12,000 workers — no word yet how that impacts Google Cloud.
Keep up with our telecom-IT layoff tracker to see which companies are cutting jobs and the ensuing channel impact. |
It’s no secret that many companies, especially those able to support remote work, added excess numbers of employees during COVID-19. They needed more brains and bodies to stay abreast of unprecedented demand that would keep customers (and themselves) running amid lockdowns and upended business models.
Now, as the virus has waned, and macroeconomic pressures hurt revenue and margins, organizations are reacting to the bloat. Tech sector layoffs, especially, abound. And cloud providers are no exception, leading to this week’s ramped-up layoff activity.
Check out our slideshow above as we look at what’s happening at Amazon Web Services and Microsoft Azure. And while there’s no firm layoffs word yet from Google Cloud, we discuss the world’s third-largest hyperscaler, too.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn. |
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