What future holds for Amazon India after mass layoffs and slowing growth?

A few days ago, Amazon India laid off around 500 employees across verticals, including Web services, human resources, and the support department. This was part of the massive layoff of 9,000 employees, announced by Amazon CEO Andy Jassy earlier this year.

The e-commerce business of Amazon is reportedly witnessing slow growth and other challenges in India. Recently, Amazon shut down its wholesale distribution business (Amazon Distribution), Ed tech business (Amazon Academy) and its food delivery business in the country.

Experts with whom THE WEEK spoke feel that rationalisation of resources is the way forward not only for Amazon but also for much of online business. “These cues were first manifested in the education business and the trends have transmuted to much of peripheral online business. However, there will be no sharp turn in the mainline e-commerce brands. On the contrary, they will benefit from the ongoing consolidation in the industry space. Recent trends hint at a mild contraction in certain sectors, even though it might be across all sectors and it is equally not secular. Amazon, being the largest player both in the e-commerce and web services segment, will be the first beneficiary when the trends upturn,” pointed out Alok Shende of Mumbai-based Ascentius Consulting.

There is no doubt that big tech companies have been under tremendous strain due to the lack of uptick in their revenues, coupled with the changes in consumer behavior such as the time spent online and the quality of engagement.

“There are dark clouds over business models of tech companies, prompting some introspection and a need for innovation. The advent of AI has started rendering some roles, such as basic administration of IT infrastructure, redundant. As they start some rethink and rejig, they need to protect their bottom lines and hence we see layoffs. We think this will continue for a quarter or two,” said Aditya Narayan Mishra, director and CEO of CIEL HR.

He, however, feels that Amazon's India business will continue to grow in e-commerce, web services, and the global capability centre. “The market for both their offerings is growing and will continue its growth. Amazon is in a strong position to leverage this. Further, as markets grow, their services will need significant customisation to suit the local needs of each market in the world. India’s tech talent prowess and cost advantages will continue to bring in more work to India,” said Mishra.

Experts point out that layoffs in Indian e-commerce companies follow what was expected, given the current economic situation across the globe. Sales and new customer tailwinds that proved to be a boon to IT and e-commerce companies during the pandemic have subsided. “Periods of scaling down for rationalisation and compensation normalisation have become the order of the day, leading to a reduction in workforce. While this is a cause of concern to the aspirational workforce, efficiency improvement and higher automation will take care of the usual business for these companies. Businesses may not have any impact on delivery or logistics or reach to customers. India adopts better than others to such change and will have no impact owing to this,” remarked Subramanyam S, founder, president and CEO of AscentHR.

Branding expert Harish Bijoor, the founder of Harish Bijoor Consults Inc, said multiple changes can be expected in the e-commerce segment and Amazon will continue to experiment in the changing scenario. “Amazon, like any large corporation, will experiment with their products, services and offerings in robust markets such as India. E-commerce itself is on the morph; therefore expect a change in business models for sure,” Bijoor told THE WEEK.