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Amazon CEO says company will slow hiring rate, no hard return to office planned

Anyone fancy renting some office space?

Amazon CEO Andy Jassy says the parent firm of the world's largest cloud service provider will likely slow the rate at which it's hiring staff, while noting he has no plans to force current workers to return to the office.

Jassy told the Code Conference in Los Angeles last night: "We don't have a plan to require people to come back... But we're going to proceed adaptively as we learn."

He also noted at the same conference that he didn't think "you'll see us hiring at the same rates that we did," adding: "But we'll be hiring."

In July, Amazon paused construction on six new office buildings in Bellevue and Nashville, saying it needed to "reevaluate" the designs to suit hybrid work.

John Schoettler, vice president of Global Real Estate and Facilities at Amazon, said in a statement shared at the time: "The pandemic has significantly changed the way people work... Our offices are long-term investments and we want to make sure that we design them in a way that meets our employees' needs in the future. This doesn't affect our plans to create more than 25,000 jobs in the city."

That was the same month that the retail and cloud juggernaut reported its earnings for Q2 2022, where CFO Brian Olsavsky, responding to a question about a quarter-on-quarter decline in headcount, said the company had "added 14,000 workers in Q1," conceding that in the "prior year we had reduced our net headcount by 27,000."

He went on to add: "I would note that we're still up 188,000 year over year and nearly double the headcount of what we had heading into the pandemic in early 2020.... Right now, we see a stabilization in the workforce."

The move to pull back on committing to office space and reported moves to shed warehouse space come against the backdrop of historic inflation that has affected consumer purchasing decisions, impacting Amazon's core e-commerce business.

The group is coming off a high of two years of record pandemic profits as locked-in householders turned to online shopping. However, in its most recent numbers, for the second 2022 quarter ended June, it reported a $2 billion net loss. The cloud division continued to do well, growing revenue 33 per cent to $19.73 billion and reporting operating profit of $5.715 billion, up more than 36 percent. Much of the group's net loss for the quarter could be attributed to paper losses on its stake in electric vehicle maker Rivian (amounting to $11.5 billion for the first two quarters of 2022), but seen against the $7.778 billion in net income it took in for the same quarter in 2021, the contrast was stark.

The effects of the company's sales during Prime Day 2022 will only be seen when it reports Q3.

Jassy, tasked with cutting costs, said of the Q2 earnings that "despite continued inflationary pressures in fuel, energy and transportation costs," Amazon was "making progress on the more controllable costs."

It's seemingly not the only conservative real estate move Amazon has made recently. Last week, consulting firm MWPVL International Inc claimed Amazon was expected to scrap plans to build several warehouse facilities across the US amid slowed sales growth.

In May, Amazon reportedly made moves to shed at least 10 million square foot of warehouse space due to slow growth and a weak profit outlook that it attributed to overbuilding. Sources told Bloomberg the plan was to sublet its existing space as well as end some of the leases where it was the lessee.

Salesforce has also made moves to cut its real estate costs in light of the shift to hybrid working, and last year canceled the lease on an unbuilt 325,000 square foot (30,193sqm) tower. In June, CEO Marc Benioff said an enforced return to the old normal would be folly, saying: "Office mandates are never going to work."

An Amazon spokesperson told us: "Amazon is a dynamic business and we weigh a variety of factors when deciding where to develop future sites or maintain a presence to best serve our partners and customers. We're always making adjustments to our network to best fit our business needs and improve the experience for our employees, partners, drivers and customers. While we're closing some of our older sites, we're also enhancing some of our facilities and we continue to open new sites as well. In fact, since 2020 we've added more than 350 new modern facilities to our network in the US alone and have dozens more facilities under construction here in the US and around the world." ®

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