Amazon is laying off approximately 14,000 corporate workers, or about 4% of its corporate staff, as part of an effort to reduce bureaucracy and redirect resources toward high-growth areas, particularly AI initiatives. The move marks one of the largest job cuts in the company’s corporate history.
Streamlining for Innovation
The layoffs are part of Amazon’s strategy to become more agile and innovative in a rapidly changing world. According to Amazon’s Senior Vice President of People Experience and Technology, Beth Galetti, the company needs to “be organized more leanly” and reduce the number of layers in its organization to “move as quickly as possible” for its customers and business. This move is expected to enable Amazon to innovate more quickly and stay competitive in the market.
Investing in AI
Despite the job cuts, Amazon is making significant investments in AI infrastructure, with capital expenditures projected to exceed $120 billion for the year. This investment is expected to drive growth and innovation in various areas of the business. Amazon CEO Andy Jassy had previously warned that AI would cause the company to reduce its workforce, stating that the company would need “fewer people doing some of the jobs that are being done today, and more people doing other types of jobs.”
Strong Financial Performance
The layoffs come despite Amazon’s strong financial performance. The company achieved a net profit of $18.2 billion for the second quarter of the year, a 35% increase compared to the same period last year. Amazon’s revenue also grew 13% year-over-year to $167.7 billion, with an operating income of $19.2 billion, increasing 31% from Q2 2024.
Industry Trend
The layoffs are part of a larger trend in the tech industry, with other companies such as Meta and Microsoft also conducting layoffs in recent months. However, Amazon’s commitment to investing in AI and streamlining its operations suggests that the company is positioning itself for long-term success in a rapidly changing market.
Support for Affected Employees
Amazon has announced support measures for affected employees, including severance packages, health insurance benefits, and transition support. Most employees will have 90 days to search for new roles within Amazon, during which their pay and benefits will continue. Those who do not secure another position internally during this notice period will receive transition support.
