Amazon will cut about 14,000 corporate jobs as the online retail giant increases costs artificial intelligence while reducing costs.
In June, CEO Andy Jassy, who has been aggressively looking to cut costs since becoming CEO in 2021, said he believes generative artificial intelligence will shrink Amazon's corporate workforce in the next few years.
Yassi said then that Amazon The company had more than 1,000 generative AI services and applications in development or built, but that figure was a “small fraction” of what it plans to create.
Jassy encouraged employees to join the company's plans to create artificial intelligence. Earlier that month, Amazon announced it plans to invest US$10 billion to build a campus in North Carolina to expand its cloud computing and artificial intelligence infrastructure.
Since the start of 2024, Amazon has committed about $10 billion to data center projects in Mississippi, Indiana, Ohio and North Carolina as it ramps up its infrastructure to compete with other tech giants and meet growing demand for artificial intelligence products.
Amazon competes in the field of artificial intelligence with such giants as OpenAI, Google and Microsoft. In a conference call with industry analysts in May, Jassy said the growth potential for the company's AWS business is enormous.
“If you believe that your mission is to make customers' lives easier and better every day, and you believe that every customer experience will be reinvented with AI, you're going to invest very heavily in AI, and that's what we're doing. You can see that in the 1,000+ AI apps we're building at Amazon. You can see that with our next generation of Alexa, called Alexa+,” he said.
On Tuesday, the online giant said it was cutting bureaucracy.
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“The cuts we're announcing today are a continuation of that work to emerge even stronger by further cutting bureaucracy, eliminating layers and shifting resources to ensure we're investing in our biggest bets and in what's most important to our clients' current and future needs,” said Beth Galetti, senior vice president of human resources and technology at Amazon, in a message to employees on Tuesday.
Teams and individuals affected by job cuts will be notified on Tuesday. Most workers will be given 90 days to find a new position within the company, Galetti said. Those who are unable to find a new position with the company or choose not to seek one will be provided with transition support, including severance pay, outplacement services and health insurance benefits.
Amazon has approximately 350,000 corporate employees and a total workforce of approximately 1.56 million. The cuts announced Tuesday represent a roughly 4% reduction in the corporate workforce.
Amazon's workforce has doubled during the pandemic as millions of people stayed home and increased online spending. In the years that followed, big tech and retail companies cut thousands of jobs to clean up costs.
The cuts announced Tuesday suggest Amazon is still trying to get the size of its workforce right, and it may not be over yet. It was Amazon's biggest cull since 2023, when the company cut 27,000 jobs. These cuts came in waves, with 9,000 jobs cut in March of that year and another 18,000 employees cut two months later. Amazon has not said whether there will be further job cuts.
Neil Saunders, managing director of GlobalData, said in a statement that the layoffs “represent a deep purge of Amazon's corporate workforce.”
“Unlike Target’s layoffs, Amazon is operating from a position of strength,” he said. “The company is experiencing good growth and still has plenty of room for further expansion both in the U.S. and internationally.”
But Saunders noted that Amazon is not immune to external factors as global markets tighten and cost bases rise.
“If a company wants to continue to deliver good results, it needs to act. This is especially true given the amount of investment the company is making in areas such as logistics and artificial intelligence. In some ways, this is a tipping point in the transition from human capital to technology infrastructure,” he said.
Amazon will release quarterly financial results on Thursday. In the most recent quarter, the company reported sales growth of 17.5% for its cloud computing division, Amazon Web Services.
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