Amazon recently announced it would layoff approximately 4% of its corporate workforce. This change will cut about 14,000 jobs and it’s all part of a big plan to cut costs and invest heavily in artificial intelligence (AI). CEO Andy Jassy has recently said that the increased impact of generative AI will likely lead to further layoffs. Stay tuned as these changes take effect in a few years’ time.
The new cuts follow closely on the heels of similar announcements of layoffs this spring. In March, the company cut 9,000 jobs, announcing in May plans to extend that round of cuts to 18,000 employees. The impact of all these layoffs taken together has led to speculation on what corporate Amazon’s post-layoff landscape will look like.
In addition to these job reductions, Amazon is making a huge bet on new data center projects in a number of other states. The company has pledged around $10 billion apiece to projects in Mississippi, Indiana, Ohio, and North Carolina. These investments highlight Amazon’s commitment to not only advance its technological infrastructure, but shape its workforce to meet the developing demands of a technology-driven world.
As part of this transition, Amazon’s Senior Vice President of People Experience and Technology Beth Galetti recently announced a pivotal Employee Engagement Plan. Nearly all impacted employees will be given 90 days to identify new roles in the firm. The move is in line with Amazon’s stated goal of cutting red tape and redirecting resources into areas of greater strategic focus.
“The reductions we’re sharing today are a continuation of this work to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we’re investing in our biggest bets and what matters most to our customers’ current and future needs,” – Beth Galetti
Amazon Web Services (AWS), the company’s cloud computing platform, has become an important part of that strategy. From its latest quarter, it announced a stunning same-store sales increase of 17.5%. During this time, Jassy saw a substantial growth opportunity ahead in the AWS business. This one small piece of information could save a lot of future hiring and investment.
When it comes to the decision to layoff staff, the report points to a strategic direction. We’re putting technological progress first, not economic requirement. As industry analysts observed when Amazon announced the trend, this is an illustrative pivot toward technology infrastructure at the expense of human capital.
“It needs to act if it wants to continue with a good bottom line performance. This is especially so given the amount of investment the company is making in areas like logistics and AI. In some ways, this is a tipping point away from human capital to technological infrastructure,” – Neil Saunders
Layoffs aside, some analysts say that Amazon’s still better positioned than its competitors. Neil Saunders, managing director of GlobalData, noted that Amazon is succeeding disproportionately during this time. The company is bullishly building the business based on its formidable first-mover advantage.
“Unlike the Target layoffs, Amazon is operating from a position of strength,” – Neil Saunders
The layoffs are expected to go into effect in the coming weeks, with teams and individuals affected being informed on Tuesday. The tech company is still moving forward with ambitious plans to develop AI and infrastructure to build smart cities. Now it stands poised to remake its workforce, so the changes better match its developing business model.
Andy Jassy emphasized the importance of AI in transforming customer experiences, stating that Amazon’s commitment to developing over 1,000 AI applications reflects its dedication to innovation.
“If you believe 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 aggressively in AI, and that’s what we’re doing,” – an Amazon executive
