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After Years of Aggressive Expansion, Amazon Finally Hit the Wall in Costa Rica

After five years of honeymooning, Amazon and Costa Rica have finally reached a rough patch.

Amazon was forced to hit the brakes in its aggressive expansion campaign in Costa Rica, which had resulted in a constant flow of foreign investment and thousands of jobs for the Central American country.

The tech and retail giant has been operating in Costa Rica since 2008, when it opened a customer service office with 75 employees. From that point onwards, its presence in the country has grown by leaps and bounds. As of July of 2021, its Costa Rican headcount surpassed 15,000 people.

Amazon’s expansion campaign entered into high gear in mid 2017. The company announced then that it would hire 2,500 Costa Ricans to cover customer experience and administration (HR, finance, anti-fraud, research) jobs, a number which represented half of its total workforce in the country at the time.

In subsequent years, the company announced four more hiring sprees in the country. Announcements to hire 2,000 workers were made in 2019, 2020 and 2021. In August 2022, the company had 3,000 customer service positions that it aimed to fill during a job fair in the capital city of San Jose. According to Amazon’s own data, between 2017 and 2021, its number of collaborators in Costa Rica had practically tripled: from 5,000 to 15,000.

Amazon’s recent growth in Costa Rica mirrors that of the company overall, which made even more bank than usual during the COVID years, when most businesses –and countries– were struggling to stay afloat. For Costa Rica, Amazon’s attention represented a solid piece of footing in times of high uncertainty.

“We feel very enthusiastic about Amazon’s announcement”, said Costa Rica’s Labor Minister, Silvia Lara, in response to the 2021 hiring spree. “We wish to thank [the company] for its commitment to the development of quality jobs in our country, particularly in times like these”.

Nevertheless, the storm is still raging. The high levels of uncertainty finally hit the tech industry, and Amazon is gearing up to survive the upcoming waves. Tough decisions were made.

Honeymoon’s Over

Amazon disclosed in January that it would lay off 18,000 employees from its workforce in Canada, Costa Rica and the US. The news came months after CEO Andy Jassy warned of cost cutting measures following a year of sky-high inflation and the threat of a global recession in 2023. 

Rumblings in social media point to between 300 and 1,000 jobs being cut in Costa Rica, though no number has been put forth officially by the company. Alejandro Filloy –Amazon’s Customer Service Director in Latin America and who had been with the company since 2008, leading operations in Costa Rica and other countries– left the company in November of last year. Jose Chavarria, who led the company’s customer service operations in Costa Rica, announced his departure officially in January 2023. 

NSAM reached out to both Filloy and Chavarria for comment and details on the layoffs. They haven’t responded as of the time of this publication. 

Costa Rica’s investment promotion agency, CINDE, stated that despite the layoffs, the country remains an exceptionally attractive location for global companies seeking a large pool of knowledge workers.

“The global effects [of the layoffs] will have a lesser impact as long as we manage to increase the added value of our workforce. That is, that Costa Rican talent can still be considered as an essential part of businesses’ formula of value and efficiency”, the IPA said in a written response to NSAM. 

“Also, we recognize that the high dynamism of the services sector and the IT subsector will allow the impacted talents to be absorbed by other companies in a state of growth”, the agency added.

The recent layoffs mark a sudden stop to Amazon’s Costa Rican expansion campaign; a sudden stop that was, perhaps, inevitable in the wake of its chain of aggressive hiring sprees in the country. 

Although Andy Jassy pointed to an “uncertain economy” as one of the main reasons for the layoffs, he also recognized that “we’ve hired rapidly over the last several years”. The statement echoes that of other tech CEOs. Google’s Sundar Pichai, for instance, stated in his own layoffs announcement that “we hired for a different economic reality than the one we face today”.

As Amazon braces for what 2023 might bring, several of its former employees in Costa Rica are already hunting for a new job. Some are shoping their CVs in LinkedIn posts and Facebook groups, making sure to mention that they’re part of the recent Amazon layoffs. Recruiters have taken notice and are also advertising job positions directed particularly at former Amazon employees.

Costa Rica Will Survive

Although Amazon’s layoffs will certainly be felt by the Costa Rican workforce, there’s little sign for worry at the moment thanks to an emerging web of support among peers, as well as the country’s reputation as an outsourcing hub.

As mentioned in CINDE’s response, laid off talents will most probably be absorbed by companies that find themselves in a better position to hire.

Recruiters, executives and other workers in the CX space already launched campaigns to catch any former Amazon worker hit by the recent layoffs. From customer service providers like Accenture and Concentrix to clothing retailer Express and The Coca Cola Company, other businesses are throwing their arms out to catch the talent forced to jump off Amazon’s boat.

Amazon itself is still advertising for jobs in Costa Rica. The open positions include customer service, marketing, HR and content.

Amazon’s short-term horizon is clouded by uncertainty. Despite having what the company itself qualified as its biggest Prime Day in history during 2022’s third quarter, expectations for the final stretch of the year are pessimistic

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Even then, one can expect Costa Rica to survive. The country has consolidated itself as a hub for Nearshore investment and is growing a reputation as a provider of quality IT services.

While Amazon and Costa Rica have run into a sour moment in their relationship, don’t be surprised by a swift reconciliation down the line.

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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