Multinational technology company Amazon has confirmed that it will lay off approximately 14,000 employees. The message to employees was published on the company’s website following media reports that the group plans to cut 30,000 jobs.
Tuesday’s news of the job cuts comes just months after CEO Andrew Jassy said the company would likely see more adoption of artificial intelligence (AI) technology.Pell downsizing. He also launched an “inefficiency initiative” encouraging employees to report unnecessary bureaucracy and inefficiencies that could be targeted for cost-cutting.
What happened?
Multiple news outlets reported Monday that Seattle, Washington-based Amazon plans to lay off 30,000 employees, citing unnamed people familiar with the matter.
In a message to Amazon employees Tuesday, Beth Galetti, Amazon’s senior vice president of people experience and technology, said 14,000 employees would be cut.
“We are working hard to support everyone whose role is affected, including giving most employees 90 days to find a new role within the company,” she wrote.
Why would Amazon do this?
The company wants to cut overhead costs and is also making headcount adjustments after hiring too many employees to meet peak demand during the COVID-19 pandemic, Reuters reported.
In 2020, online shopping surged while many countries were under lockdown due to the coronavirus infection. To meet demand, Amazon ramped up hiring, at one point hiring an average of 1,400 new employees per day. Amazon added 427,300 new jobs from January to October 2020, increasing the number of employees worldwide to more than 1.2 million, an increase of more than 50% from the previous year.
“Some may wonder why we are reducing our roles when the company is doing so well. We deliver great customer experiences, innovate rapidly, and outperform every day across our businesses. What we need to remember is that the world is changing rapidly,” Galetti wrote in a message to staff.
“This generation of AI is the most transformative technology since the Internet, enabling companies to innovate much faster than ever before (in existing market segments and entirely new market segments).…We need fewer layers, more ownership, and more efficient organization to act as quickly as possible for our customers and our businesses.”
How significant are these layoffs?
All of the job losses are coming from Amazon’s corporate division. In addition to office workers, Amazon employs engineers, laborers, craft workers, and service workers, but so far there has been no impact.
The loss of 14,000 employees, or 30,000 if media reports are accurate, appears to be of little significance in the grand scheme of a total workforce of approximately 1.55 million. However, even at 14,000, that’s 4% of Amazon’s 350,000 employees.
This will be the company’s largest workforce reduction since 2022, when it cut 27,000 employees.
What is Jassy’s “Tackling Inefficiency”?
Amazon’s CEO previously said the company would consider job losses as a way to reduce bureaucracy within the company. This includes reducing the number of administrators.
In September 2024, Jassy announced the launch of a “Bureaucracy Mailbox” for Amazon employees to report instances of unnecessary bureaucracy and “excessive processes.” He said there have been approximately 1,500 responses so far, resulting in more than 450 process changes.
He also told staff that he has advised each of Amazon’s senior leadership teams to increase the employee-to-manager ratio by at least 15 percent by the end of the first quarter of 2025. This ultimately means the company aims to reduce the number of managers responsible for more employees.
Is AI responsible for job losses?
Maybe so, yes. Mr. Jassy sent a message to Amazon employees in June saying he hoped the technology would mean fewer people working on some jobs.
“As we deploy more generative AI and agents, the way we work will change. We will need fewer people to do some of the jobs we do today, and more people to do other types of jobs,” Jassy said in a statement posted on Amazon’s website.
“While it is difficult to know exactly where this will impact over time, we expect this to reduce a company’s total workforce over the next few years as widespread use of AI across the company increases efficiency.”
That same month, Jassy said in an interview on the CNBC television network that, “As with any technological change, there will be fewer people working in some of the jobs that technology actually starts to automate.”
Amazon and a group of other technology companies will also seek to recoup investments they have made in developing AI infrastructure, analysts said.
“This move signals that Amazon is likely to be able to realize AI-driven productivity gains within corporate teams and support significant headcount reductions. Amazon is also under short-term pressure to offset long-term investments in building out its AI infrastructure,” eMarketer analyst Sky Canaves told Reuters.
What occupations are most likely to be affected by advances in AI?
In July, Microsoft published a research paper listing 40 jobs most likely to be replaced by AI and 40 jobs that are least likely to be replaced by AI.
Jobs expected to be lost include interpreters and translators, passenger crew, service sales representatives, writers and writers, customer service representatives, telephone operators, ticket salespeople, telemarketers, concierges, political scientists, news analysts, journalists, mathematicians, technical writers, proofreaders, market research analysts, and more.
Occupations considered safe to be replaced include phlebotomists, nursing assistants, painters, embalmers, oral and maxillofacial surgeons, tire repair and replacement technicians, highway maintenance workers, eye care technicians, massage therapists, surgical assistants, and dredging operators.
