Amazon Eliminates 30,000 Corporate Roles Amid Efficiency Drive and AI Focus
Amazon has completed multiple rounds of corporate workforce reductions, resulting in the elimination of approximately 30,000 roles. These cuts, representing about 9-10% of the company's corporate staff, follow previous significant job reductions in 2022 and 2023. Amazon leadership has cited reasons including the need for a leaner organizational structure, reduced bureaucracy, and the reallocation of resources towards key investments, particularly in artificial intelligence (AI). The company has outlined support measures for affected employees, including opportunities to seek new internal roles and severance packages.
Workforce Reductions Unfold
Amazon implemented two primary rounds of corporate workforce reductions. An initial round affected approximately 14,000 roles, followed by an additional round impacting about 16,000 employees. The combined total for these recent cuts stands at approximately 30,000 corporate positions. This figure represents nearly 10% of Amazon's corporate workforce, which was reported to be around 350,000 employees.
The reductions have affected various divisions, including Amazon Web Services (AWS), retail operations, Prime Video, and human resources. Some internal communications regarding the layoffs, including an email referring to the process as "Project Dawn," were reportedly shared with staff prior to official announcements.
Strategic Rationale and AI Focus
Amazon leadership has provided multiple reasons for the workforce adjustments, emphasizing efficiency and a forward-looking investment strategy.
Driving Efficiency and Lean Structure
Senior Vice President Beth Galetti stated the decisions aim to make the company "even stronger" by redirecting resources toward its "biggest bets" and customer requirements.
"The company's need to be organised more leanly, with fewer layers and more ownership, to enhance operational speed for customers and business objectives."
CEO Andy Jassy also indicated that job reductions were a result of excessive bureaucracy and organizational layers within the company.
The Role of Artificial Intelligence
Galetti described AI as "the most transformative technology we've seen since the Internet," necessitating a leaner structure and resource reallocation towards AI. CEO Jassy had previously indicated that an increase in AI tools would likely lead to job reallocations.
"Fewer people doing some of the jobs that are being done today, and more people doing other types of jobs."
He has also stated that generative AI was expected to reduce Amazon's corporate workforce in the coming years and that the company plans to utilize generative AI to replace some corporate positions.
One report attributed to CEO Andy Jassy specifically stated that the job reductions were a result of excessive bureaucracy and organizational layers, rather than advancements in artificial intelligence or financial challenges.
Support for Affected Employees
Amazon has stated plans to support impacted employees by assisting them in finding new roles internally. Those who do not secure new positions within a 90-day period are offered "transition support," including severance pay, outplacement services, and health insurance benefits.
Context: History and Financial Landscape
The recent layoffs follow a period of significant workforce expansion during the Covid-19 pandemic, when Amazon increased hiring to meet heightened demand for online deliveries and digital services. Since then, CEO Andy Jassy has prioritized reducing spending while investing in AI tools. The company conducted previous rounds of corporate division cuts, including approximately 27,000 workers over several months in 2022 and 2023.
In its most recent quarter, Amazon reported an increase in sales by 13% year-over-year to $167.7 billion and profits rising nearly 40% to approximately $21 billion on revenue over $180 billion. Despite this financial performance, some analysts have expressed skepticism regarding the value and potential returns of Amazon's AI investments, citing more subdued profit guidance for upcoming quarters and slower growth in its cloud business, Amazon Web Services (AWS), compared to competitors.
Broader Industry Trends
Amazon's workforce reductions occur within a broader trend of job cuts across various sectors. Other companies, including Dow, UPS, Tyson Foods, HP, Verizon, Nestlé, Novo Nordisk, Intel, Procter & Gamble, Microsoft, and Pinterest, have also announced significant layoffs. Some cited economic uncertainty, rising operational costs, and the integration of AI as contributing factors. UPS, for instance, announced plans to cut operational jobs, partly attributing this to reduced shipments from Amazon.