The news that Amazon has expanded global layoffs from 10,000 to 18,000 jobs in the last two months is indicative of the challenging environment facing the tech sector, Vancouver industry officials say.
The announcement from the Seattle-based e-commerce giant on Wednesday came from a publicly released note from CEO Andy Jassy, and reports noted that the majority of the roles eliminated will be in areas such as Amazon’s physical stores and human resources division – although some have also speculated that job losses may be concentrated in the firm’s corporate ranks.
In trading on the Nasdaq today (Jan. 5), Amazon shares closed down by US$2.02 to US$83.12. The company has seen its share prices lose more than half their value since prices reached a high of more than US$185 in July 2021.
Brenda Bailey, B.C.'s minister of jobs, economic development and innovation, says the province is keeping a close eye on the various tech layoffs in the market: "So far, what it looks like is that deeper layoffs are happening in the Silicon Valley rather than happening here."
Jassy in his letter cited an uncertain economic environment – as well as the company’s hiring spree in recent years in the wake of COVID-driven waves of demand from consumers avoiding physical stores. That uncertain economic environment is not only plaguing major tech players like Amazon, said Ilya Brotzky, CEO and co-founder of tech human-resources firm Vanhack.
“I think everyone is just kind of in a wait-and-see mode right now, especially coming back from the holidays,” Brotzky said. “Everyone’s trying to figure out what the trends are going to be, where things are going.
“Probably, people are predicting another quarter or two of slower times, and then potentially in the fall things will be picking up again. But it has been a bit of a self-fulfilling prophecy: Everyone starts worrying about the economy, and then people slow down their purchases because of it. That starts affecting other companies and begins a wave... It’s a combination of inflation, consumer fears, everything.”
The struggles in the tech sector have been well publicized since late last year. In December, job search firm Indeed released date showing Canadian tech job postings on the site falling 32% since May. Analysts say the drop brings overall job numbers closer to pre-pandemic levels, before quarantining consumers began flocking to e-commerce to fill voids left vacant by the lack of vacation travel and in-store consumption.
Brotzky confirmed as well that the struggles can be seen in Vancouver and throughout the local tech sector, with many of Vanhack’s clients pausing or scaling back hiring in recent months.
There are silver linings in the grim situation, however. Bailey noted that B.C.'s tech industry has been severely impacted by the skilled-labour shortage - and bigger layoffs in the United States (Bay Area or Seattle) may mean more availability of talent here in Vancouver.
"There have been layoffs in our market as well, but my understanding from people on the ground is that those folks [who are laid off] are still finding worker, and there's still a shortage of workers in our market," Bailey said. "We are of course watching things very closely, and things can change quickly. But so far, people are continuing to find employment [in B.C. tech]."
Brotzky agreed. He noted that – for an industry that has experienced acute skilled labour shortages like many others during the pandemics period – the current downturn may mean it is easier for tech firms who want to add talent to their teams to find the right person for sustainable growth.
He added that the 18,000 number, while large in isolation, will be spread out globally. It means that – despite Amazon’s sizeable presence in Metro Vancouver – the exact number of jobs affected locally by the news should be much, much smaller. It means that the talent ousted from Amazon should be able to be absorbed by Vancouver’s tech scene, even if economic uncertainty persists.
“I think it’s good for the start-up ecosystem,” Brotzky said. “Hopefully, many of these people will go off and join tech companies or start their own firms. I’m sure they will have a good pension or severance package, and hopefully they will continue to create and innovate... I’d be curious to see what the actual number of software developers laid off here in Vancouver. And even if our ecosystem can’t absorb them, these are smart, talented people who will find their space to do what they do.”
A report released today by tech human resources firm Karat noted that Vancouver remains the third-ranked city globally for hiring software developers in 2023, behind only Singapore of Tokyo. The report noted Vancouver and Toronto’s high concentration of top software developers and echoed Brotzky’s observations that – while “slowdown in big tech hiring is hitting these markets especially hard” – there are new opportunities for “homegrown start-ups,” as well as other sectors like finance and energy needing tech expertise.
“The big tech struggles you see [at companies like Amazon] are more often based on share prices,” Brotzky added. “The company has to impress Wall Street and become more profitable. They have to show better numbers to public investors, and that’s where a lot of these [layoffs] are coming from... For companies like Amazon, the layoff is about 1.2% of their overall workforce, so it may just be a minor blip after the huge hiring spree we’ve seen.”