Amazon’s Record Layoffs: Thousands of Engineers Cut, Filings Reveal

Amazon’s recent announcement of over 14,000 layoffs sent ripples through its vast corporate structure, impacting divisions ranging from cloud computing and device manufacturing to advertising, retail operations, and grocery stores. However, a closer analysis of the workforce reduction reveals a disproportionate impact on one particular sector: engineering.

According to Worker Adjustment and Retraining Notification (WARN) filings submitted to state agencies in New York, California, New Jersey, and Washington (Amazon’s home state), engineering roles accounted for nearly 40% of the more than 4,700 jobs eliminated in those states. These filings, while representing a significant portion of the total layoffs announced in October, do not paint a complete picture due to varying state WARN reporting requirements.

This move places Amazon among a growing cohort of tech giants that have implemented substantial job cuts in 2023, even against a backdrop of robust cash reserves and profitability, marking the steepest round of cuts in its 31-year history. Layoffs.fyi estimates that nearly 113,000 positions have been eliminated across 231 tech companies, continuing a trend that began in 2022 as businesses recalibrated their strategies following the pandemic-induced boom. The market downturn, rising interest rates, and a reassessment of future growth prospects have all contributed to this trend.

Amazon CEO Andy Jassy’s ongoing initiative to transform the company’s corporate culture into what he terms “the world’s largest startup” is a key factor driving these decisions. This involves streamlining operations, reducing bureaucratic layers, and empowering employees to achieve more with fewer resources to cut organisational bloat.

CNBC has previously reported that Amazon is anticipated to implement further job reductions in January.

The company has also articulated a strategic shift towards increased investment in artificial intelligence (AI). This technological pivot is poised to significantly reshape Amazon’s white-collar workforce, with Jassy predicting in June that corporate headcount will decrease in the coming years as AI-driven efficiency gains materialize. This trend of AI-driven automation replacing human roles is a broader challenge for the tech industry and the broader economy. Amazon will need to carefully manage the social impact of these workforce changes, ensuring that redundant workers are retrained and redeployed where possible.

In her memo announcing the layoffs, HR Chief Beth Galetti emphasized the importance of innovation, a goal the company now seeks to achieve with a leaner workforce, particularly in its engineering divisions. Galetti wrote, “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 business.”

While Amazon emphasized that AI wasn’t the primary driver of the layoffs, stating that reducing bureaucracy and accelerating decision-making were key motivations, the role of AI augmentation in streamlining engineering processes is undeniable. The company is seeking to optimize operations and reduce redundancy as the business evolves to take advantage of more automation solutions. The bigger goal was to reduce bureaucracy and emphasize speed.

During Amazon’s recent earnings call, Jassy attributed the cuts, in part, to a “culture” issue stemming from an extended hiring spree conducted during the pandemic. This period of rapid expansion resulted in “a lot more layers” and slower decision-making processes.

WARN filings indicate that the layoffs have impacted software engineers across various levels, with SDE II roles (mid-level employees) being disproportionately affected, perhaps due to a greater degree of task automation.

The rise of AI-powered coding assistants and “vibe coding platforms” from vendors like Cursor, OpenAI, and Cognition is further impacting software development job prospects, increasing productivity and reducing the need for large numbers of coders. Amazon has already released its own competitor.

Documents from states with WARN notices show that more than 500 product managers and program managers were eliminated, accounting for over 10% of the total. Senior manager and principal-level positions were also affected.

As part of its broader cost-cutting strategy, Amazon has curtailed investments in experimental or unprofitable ventures, sunsetting a telehealth service, a kids’ video calling device, a fitness wearable, and several brick-and-mortar retail chains.

Amazon’s video game division also experienced significant cutbacks. Steve Boom, VP of Audio, Twitch, and Games, stated that “significant role reductions” would occur in its San Diego and Irvine, California, game studios, as well as within its central publishing team.

Game designers, artists, and producers comprised over a quarter of the total cuts in Irvine and approximately 11% of the layoffs at Amazon’s San Diego offices, according to the filings.

The company also announced a shift away from much of its work on big-budget, or triple-A, game development, particularly massively multiplayer online (MMO) games. Amazon has released MMOs such as Crucible and New World and had been developing an MMO based on “Lord of the Rings.” The shift to focusing on other segments of the gaming market raises questions about the competitiveness of studios in the triple-A space, and the company is refocusing its efforts to become profitable games division.

Beyond gaming, Amazon significantly reduced its visual search and shopping teams, according to employee posts on LinkedIn. This unit is responsible for products like Amazon Lens and Lens Live, those are AI shopping tools. The layoffs heavily impacted software engineers, applied scientists, and quality assurance engineers across Amazon’s offices in Palo Alto, California.

Amazon’s online advertising business, one of its most profitable divisions, also experienced downsizing. Over 140 ad sales and marketing roles were eliminated across Amazon’s New York offices, accounting for roughly 20% of the approximately 760 positions cut, the documents showed.