Amazon has announced a reduction of approximately 14,000 roles within its global corporate workforce. Senior Vice President Beth Galetti stated the move is intended to reallocate resources towards key investments and future customer needs, citing artificial intelligence (AI) as a transformative technology necessitating a leaner organizational structure. The company, which previously laid off 27,000 corporate workers in 2022, reported second-quarter sales exceeding expectations, but faces scrutiny regarding AI investment returns and slower growth in its AWS cloud business.
Workforce Reduction Details
Amazon confirmed it will reduce its global corporate workforce by "approximately 14,000 roles." This figure is below earlier reports that suggested potential layoffs of up to 30,000 workers. Beth Galetti, Amazon's Senior Vice President, communicated to staff that the decision aims to make the company "even stronger" by redirecting resources toward its "biggest bets" and customer requirements.
Rationale and Strategic Direction
Ms. Galetti stated the cuts are necessary due to AI being "the most transformative technology we've seen since the Internet," enabling faster innovation. She emphasized the company's need to be "organised more leanly, with fewer layers and more ownership," to enhance operational speed for customers and business objectives.
Amazon CEO Andy Jassy had previously indicated in June that an increase in AI tools would likely lead to job reallocations, with "fewer people doing some of the jobs that are being done today, and more people doing other types of jobs."
Employee Support and Scope
Amazon plans to support impacted employees by assisting them in finding new roles internally. Those who do not secure new positions will receive "transition support," including severance pay. The company has over 1.5 million employees globally, with approximately 350,000 in corporate positions as of last year. The BBC has inquired about the potential impact on UK employees.
Historical Context
Like many technology firms, Amazon significantly expanded its hiring during the Covid-19 pandemic to meet increased demand for online deliveries and digital services. Since then, CEO Andy Jassy has prioritized reducing spending while investing heavily in AI tools to boost efficiency. The company conducted previous rounds of corporate division cuts, including approximately 27,000 workers over several months in 2022.
Financial Performance and Investor Sentiment
Amazon's second-quarter results at the end of July surpassed Wall Street expectations on multiple metrics, including a 13% year-over-year increase in sales to $167.7 billion. However, analysts have expressed skepticism regarding the value and potential returns of Amazon's substantial AI investments, citing more subdued profit guidance for the upcoming quarter. Slower growth in its cloud business, Amazon Web Services (AWS), compared to competitors Microsoft and Google, has also raised concerns among some investors. Amazon is scheduled to report its latest quarterly results for the period ending September 30 on Thursday.