Amazon confirms huge job losses in corporate division

Amazon has confirmed it plans to cut thousands of jobs, saying it needs to be “organized more simply” to take advantage of the opportunity presented by artificial intelligence (AI).

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

Earlier reports suggested they planned to cut up to 30,000 jobs.

Beth Galetti, Senior Vice President of Amazon, wrote in a memo to staff that the move will make the company “even stronger” by shifting resources “to ensure we invest in our biggest bets and what matters most to our customers’ current and future needs.”

She acknowledged that some would question the move because the company is performing well.

In late July, Amazon reported second-quarter results that beat Wall Street expectations on several metrics, including a 13% year-on-year increase in sales to $167.7bn (£125bn).

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

“We believe we need to be organized more simply, with fewer layers and more ownership to move as quickly as possible for our customers and business,” she added.

The memo, shared with Amazon employees earlier Tuesday, said the company is “working hard to support everyone whose role is affected” — including helping those affected find new roles at Amazon.

Those who cannot will receive “transitional support”, including compensation, it said.

The BBC asked if this would affect employees in the UK.

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

This includes about 350,000 corporate workers, which include executive, management and sales positions, according to the numbers which Amazon presented to the US government last year.

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

Since then, Amazon chief Andy Jassy has focused on cutting costs as the company invests heavily in AI tools to boost efficiency.

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

“We will need fewer people to do some of the tasks that are being done today and more people to do other types of work,” he said at the time.

Amazon has made several rounds of layoffs at its corporate division in recent years.

It laid off about 27,000 workers in a few months in 2022. as rivals similarly sought to reverse hiring increases made during the pandemic.

After the company released its latest financial results in July, its more subdued profit guidance for the upcoming quarter left some skeptical about whether — or when — its massive AI investments would pay off.

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

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

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

“We are already seeing software development jobs being freed up by the capabilities of some of these AI tools, and large companies will be looking to reallocate and restructure their workforce accordingly,” he told the BBC.

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

Additional reporting by Philippa Wayne