Amazon to Cut Around 14,000 Corporate Jobs

Amazon (AMZN) announced Tuesday it will reduce its corporate workforce by roughly 14,000 employees, the latest in a series of cost-cutting measures designed to streamline operations and free up resources for strategic investments, particularly in the burgeoning field of generative artificial intelligence.

According to a company blog post, the layoffs aim to create a leaner, less bureaucratic organization capable of faster innovation. Beth Galetti, Amazon’s senior vice president of people experience and technology, emphasized the transformative potential of AI, stating, “This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before… We’re convinced that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and businesses.”

These cuts are expected to be the most extensive corporate job reductions in the company’s history. Reports suggest the impact could reach as many as 30,000 employees across various divisions.

The layoffs, impacting employees across divisions including video games, grocery, human resources, sustainability, communications, advertising, and devices, represent a significant shift in Amazon’s staffing strategy. The move underscores a broader trend within the tech sector, where companies are reassessing workforce needs in light of advancements in AI and the imperative to improve operational efficiency.

Amazon, the second-largest private employer in the U.S., boasts a global workforce exceeding 1.54 million, primarily comprised of warehouse staff. With roughly 350,000 corporate and tech employees, the announced cuts represent approximately 4% of this segment.

While the company anticipates further workforce reductions in the coming year, it also plans to continue hiring in strategically important areas. This suggests a redeployment of talent toward initiatives deemed crucial for future growth, with AI at the forefront.

Amazon’s decision follows similar moves by other tech giants, including Meta, Microsoft, and Google, all of whom have cited AI as a catalyst for workforce adjustments. These companies are increasingly leveraging AI to automate tasks, improve productivity, and reduce the need for human labor in certain roles. The transition towards AI-driven operations is expected to drive significant changes to employment landscape moving forward.

CEO Andy Jassy previously signaled Amazon’s shift toward AI, stating that the company would “need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs.” This statement highlights the evolving nature of work in the age of AI, where roles are shifting, requiring new skills and expertise.

Jassy, who succeeded Jeff Bezos in 2021, has been actively pursuing cost-cutting measures across the company. Amazon previously laid off 27,000 employees between 2022 and 2023, and smaller-scale job cuts have continued since then. The company is strategically reallocating resources as it adapts to an evolving competitive landscape.

This pullback on staffing follows a period of aggressive hiring during the COVID-19 pandemic when Amazon experienced a surge in demand for e-commerce and cloud computing services. However, evolving market dynamics and increased competition in the cloud and AI spaces have spurred the company to streamline operations.

Amazon has committed approximately $118 billion to AI development and cloud infrastructure. The investments reflect the company’s determination to solidify its position in these technologically competitive areas.

Beyond cost optimization, Jassy has also initiated changes to Amazon’s corporate culture aimed at fostering a more agile, startup-like environment. A key element of this strategy involves flattening organizational structures to reduce bureaucracy and increase operational speed.

Earlier in the month, Amazon announced plans to hire 250,000 workers for full-time, part-time, and temporary roles in its fulfillment and transportation networks to address demand during the holiday months. This underscores the dichotomy of Amazon’s short-term and longer-term workforce strategies, hiring massively for seasonal surge needs while simultaneously focusing on long-term efficiencies.

Amazon is scheduled to announce its third-quarter results Thursday after the market closes. Analysts will be closely watching for more details about the company’s updated strategies and the anticipated effect on its financial performance.