Amazon R&D and infrastructure spending spikes as tech giant staffs up on technical talent

(GeekWire Photo)

Amazon is spending more cash to hire top technical workers in key growth areas as the Seattle company competes for talent in a tight labor market.

Amazon’s headcount rose 13 percent in the second quarter of 2019 to a global total of 653,300, an all-time high for the 25-year-old tech giant. But its technical headcount for areas such as Amazon Web Services and its voice technology arm grew at nearly twice the rate of overall hiring in the quarter, Amazon CFO Brian Olsavsky said on a call with investors Thursday.

Amazon’s “technology and content” expense rose 25 percent to just over $9 billion in the second quarter. For the first time ever, the company also spent more than $1 billion on stock-based compensation for technology and content, a figure that points to increased engineering hiring.

While Amazon includes its R&D spend within “technology and content,” that line item also includes design and maintenance of stores, curation of products online, and infrastructure costs such as servers, networking equipment and data center rent. The rise in costs in this area stems “primarily from an increase in spending on technology infrastructure and increased payroll and related costs associated with technical teams responsible for expanding our existing products and services and initiatives to introduce new products and service offerings,” according to the company’s quarterly 10-Q filing.

(Amazon Web Services Photo)

Amazon Web Services has more than five times the number of open jobs as the next closest team, Amazon’s flagship retail operation, with 12,355 openings as of Friday. The cloud division continues to juice Amazon’s bottom line, however its growth is starting to slip.

The Alexa group has 1,566 open positions, trailing AWS, retail, fulfillment services, and HR.

Spending is on the rise for Amazon as a whole, cutting into a recent run of record profits. Amazon lowered expectations for its operating income in the current quarter, down as much as $1.6 billion from last year, suggesting that the company will continue to spend big on new initiatives, led by the shift from two-day shipping to a one-day offering.

Amazon is also spending heavily on marketing, as related expenses grew 48 percent to $4.3 billion in the second quarter. Olsavsky that was a result of increasing AWS sales and marketing firepower, as well as advertising for Prime Video content.