India A ‘High Priority’ Market: Amazon Told Employees Days Before Layoffs Announcement

As Amazon began its first ever mass layoff exercise, which will reportedly result in 10,000 jobs being cut globally, employees in its India offices are still not certain about their fate. 

Sources in Amazon told Inc42 that the US-based etailer’s global leadership team addressed the India team just a few days before the layoffs and stated that the country is a key geography for it and more investment will trickle in.

Amazon employs more than 1.5 Mn people globally, with India accounting for roughly 7% of its overall workforce at 1,00,000 employees. Amazon has offices in Bengaluru, Hyderabad,Chennai, Mumbai, Pune and Gurugram in India.

“We have been assigned important goals for the next year by the leadership. In the communication, it was made clear that India will be a high priority geography,” a top Amazon executive said on the condition of anonymity.

Another senior executive based in Bangalore said that until now a majority of the teams in India haven’t received any communication on the layoffs and there is an atmosphere of distress among the employees.

“In fact, some reports suggesting job cuts in a few hundreds in India are extremely shocking to us because only four days ago we were addressed by global leadership assigning fresh tasks to various teams,” the first source quoted above said.

An Amazon Global spokesperson told Inc42 that considering the macroeconomic scenario, some of the roles will no longer be necessary.

“As part of our annual operating planning review process, we always look at each of our businesses and what we believe we should change. As we’ve gone through this, given the current macroeconomic environment (as well as several years of rapid hiring), some teams are making adjustments, which in some cases means certain roles are no longer necessary. We don’t take these decisions lightly, and we are working to support any employees who may be affected,” Amazon spokesperson Kelly Nantel said in a statement. 

However, Nantel didn’t comment on the number of employees that will be affected at Amazon’s India employees by the restructuring exercise.

Massive Job Cuts Unlikely In India

While some media reports have said that hundreds of Amazon employees in India will face the axe, Indian executives are confident that retrenchments will be lower in India offices as compared to overseas offices. As of now, according to several media reports and Linkedln posts, Amazon has cut jobs in its devices, Alexa, cloud gaming, and Luna verticals, impacting many Indians working on H-1B visas in the US and Canada.

Under the US immigration rules, H-1B visa holders who lose employment need to find a job within 60 days after being fired or resigning, failing which they will have to relocate to their home country. 

Sources told Inc42 that employees in the software development engineering (SDE) vertical, and those working on new features for Alexa and Luna services have been laid off in the first phase. 

Inc42 couldn’t independently verify the number of people in India working in the Alexa, Luna  and R&D verticals. However, some software developers said that many employees from level L1 to L7 in India have been put under Performance Improvement Plan (PIP) with tighter deadlines.

“The SDE tasks are not easily achievable within a limited time frame and there is a looming fear that the company might be trying to cut some portion of the staff,” an Amazon employee said. 

According to a Deccan Herald report, the etailer, in an internal memo to its India employees, has offered a voluntary severance package to some workforce. The package includes a lump sum severance payment equivalent to base pay of 22 weeks, one-week base salary for every six months of service (up to a maximum benefit of 20 weeks paid severance), medical insurance coverage for six months and a notice period or pay in lieu. 

The report further stated that the voluntary severance plan will be effective from December.

Amazon’s sales and profit showed a rebound in Q3 2022 compared to the previous quarters, however, the fears of a looming recession made the company take the decision to lay off employees.

“We are seeing signs all around that people’s budgets are tight, inflation is still high, energy costs are an additional layer,” Brian Olsavsky, Amazon’s finance chief, said on a call with reporters. “We are preparing for what could be a slower growth period,” he added. 

In its Q3 results, the ecommerce giant said that while its advertising revenue grew reasonably, there was a drag in its cloud computing business. It also highlighted the weakening demand in Europe.

In India, Amazon is far from making profit. However, it managed to narrow its loss 23% year-on-year (YoY) to INR 3,649 Cr in FY22. 

The Seattle-headquartered company is facing stiff competition in India from Walmart-owned Flipkart, Reliance and Tata Group in the e-commerce industry. Besides, it is also facing several investigations and is involved in legal battles for alleged violations of the country’s competition laws and foreign investment rules.