Amazon confirms massive job losses in corporate division

Amazon has confirmed it plans to cut thousands of jobs, saying it needs to be “organised more leanly” to seize the opportunity provided by artificial intelligence (AI).

The tech giant said on Tuesday it would reduce its global corporate workforce by “approximately 14,000 roles”.

Earlier reporting had suggested it was planning to lay off as many as 30,000 workers.

Beth Galetti, a senior vice president at Amazon, wrote in a note to staff that the move would make the company “even stronger” by shifting resources “to ensure we’re investing in our biggest bets and what matters most to our customers’ current and future needs”.

She acknowledged that some would question the move given the company was performing well.

At the end of July, Amazon reported second quarter results which beat Wall Street expectations on several counts, including a 13% year over year increase in sales to $167.7bn (£125bn).

But Ms Galetti said the cuts were needed because AI was “the most transformative technology we’ve seen since the Internet” and was “enabling companies to innovate much faster than ever before.”

“We’re convicted that we need to be organised more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business,” she added.

The note, shared with Amazon employees earlier on Tuesday, said the company was “working hard to support everyone whose role is impacted” – including by helping those affected find new roles within Amazon.

Those who cannot will receive “transition support” including severance pay, it said.

The BBC has asked if it will affect employees in the UK.

The company has more than 1.5 million employees across its warehouses and offices worldwide.

This includes around 350,000 corporate workers, which include those in executive, managerial and sales roles, according to figures that Amazon submitted to the US government last year.

Like many technology firms, Amazon hired aggressively during the Covid-19 pandemic to meet the surge in demand for online deliveries and digital services.

Amazon boss Andy Jassy has since focused on reducing spending as the company invests heavily in AI tools to boost efficiency.

Mr Jassy said in June that the increase in AI tools will likely lead to job cuts as machines take over routine tasks.

“We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs,” he said then.

Amazon has carried out several rounds of cuts to its corporate division in recent years.

It laid off around 27,000 workers over several months in 2022, as rivals similarly looked to reverse hiring increases made during the pandemic.

After the company posted its latest financial results in July, its more subdued profit guidance for the forthcoming quarter left some sceptical of whether – or when – its enormous AI investments would pay off.

Slower growth for its cloud business, Amazon Web Services (AWS), compared to rivals Microsoft and Google, also sparked concern among some investors.

Amazon will report its latest results on Thursday for the period ending 30 September.

Ben Barringer, technology analyst at Quilter Cheviot, said the wider industry would be watching Amazon closely as it embarked on its latest round of cuts.

“We are already seeing jobs in software development be shed thanks to the capabilities of some of these AI tools, and the big companies will be looking to redistribute and restructure their workforces accordingly,” he told the BBC.

“They have the data and can apply AI in a way that unfortunately means job losses are inevitable.”

Another analyst, Melissa Otto, from Visible Alpha Research, suggested the cuts were really about boosting profits rather than promoting AI.

Amazon had “different levers” it could pull to increase profitability, she suggested.

“Optimising their work forces is potentially one of those levers, especially if we’re in an environment where top line growth may start to slow,” she said.

Additional reporting by Philippa Wain