Amazon confirms massive job losses in corporate division

Amazon has confirmed it plans to cut thousands of jobs, saying it needs to “organize leaner” to take advantage of the opportunities presented by artificial intelligence (AI).

The tech giant said Tuesday it would cut its global corporate workforce by “approximately 14,000 positions.”

It was previously reported that the company plans to lay off up to 30,000 workers.

Beth Galetti, Senior Vice President, Amazon wrote in a note to employees that the move will make the company “even stronger” by reallocating resources “to ensure we are investing in our biggest bets and in what matters most to our customers' current and future needs.”

She acknowledged that some would question the move given the company's performance.

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

But Ms Galetti said the cuts were necessary because artificial intelligence was “the most transformative technology we've seen since the internet” and was “enabling companies to innovate much faster than ever before”.

“We believe we need to be more organized, with fewer layers and more accountability, to move as quickly as possible in the best interests of our clients and business,” she added.

The memo, which was distributed to Amazon employees earlier Tuesday, said the company is “working hard to support everyone whose roles are affected,” including helping those affected find new positions at Amazon.

Those who fail will receive “transition support,” including severance pay, it said.

The BBC asked whether this would affect staff in the UK.

The company employs more than 1.5 million employees in its warehouses and offices around the world.

This includes approximately 350,000 corporate employees, including in executive, management and sales positions. by the numbers Amazon submitted to the US government last year.

Like many tech companies, Amazon has been hiring aggressively during the Covid-19 pandemic to meet growing demand for online deliveries and digital services.

Amazon CEO Andy Jassy has since focused on cutting costs as the company invests heavily in artificial intelligence tools to improve efficiency.

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

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

Amazon has made several rounds of cuts across its corporate division in recent years.

In just a few months of 2022, the company laid off about 27,000 workers. as competitors similarly sought to reverse the hiring surge that occurred during the pandemic.

After the company released its latest financial results in July, its more muted earnings forecast for the coming quarter had some skeptical about whether (and when) its huge investments in artificial intelligence would pay off.

The slower growth of Amazon Web Services' (AWS) cloud business compared with rivals Microsoft and Google has also raised concerns among some investors.

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

Ben Barringer, technology analyst at Quilter Cheviot, said the broader industry will be keeping a close eye on Amazon as it embarks on its latest round of cuts.

“We're already seeing job losses in software development thanks to the capabilities of some of these artificial intelligence tools, and large companies will be looking to redeploy and restructure their workforce accordingly,” he told the BBC.

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

Another analyst, Melissa Otto of Visible Alpha Research, suggested that the cuts were actually about increasing profits rather than promoting artificial intelligence.

She said Amazon has “different levers” it can pull to improve profitability.

“Optimizing their workforce is potentially one of those levers, especially if we're in an environment where revenue growth may start to slow,” she said.

Additional reporting by Philippa Wayne