Amazon to cut 14,000 corporate jobs as AI spending increases
Amazon will cut about 14,000 corporate jobs as the online retail giant ramps up spending on artificial intelligence while trimming spending.
In June, CEO Andy Jassy, who has aggressively sought to cut costs since becoming CEO in 2021, said that he anticipated generative AI would reduce Amazon’s corporate workforce in the next few years.
Jassy said at the time that Amazon had more than 1,000 generative AI services and applications in progress or built, but that figure was a “small fraction” of what it plans to build.
Jassy encouraged employees to get on board with the company’s AI plans. Earlier that month, Amazon announced that it was planning to invest $10 billion toward building a campus in North Carolina to expand its cloud computing and artificial intelligence infrastructure.
Since 2024 started, Amazon has committed to about $10 billion apiece to data center projects in Mississippi, Indiana, Ohio and North Carolina as it ramps up its infrastructure to compete with other tech giants to meet growing demand for artificial intelligence products.
Amazon is competing in the AI space with giants like OpenAI, Google and Microsoft. In a conference call with industry analysts in May, Jassy said the potential for growth in the company’s AWS business is massive.
“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. You can see that in the 1,000-plus AI applications we’re building across Amazon. You can see that with our next generation of Alexa, named Alexa+," he said.
On Tuesday, the online giant said it was reducing bureaucracy.
“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, Senior Vice President of People Experience and Technology at Amazon, said in a message to employees Tuesday.
Teams and individuals impacted by the job cuts will be notified on Tuesday. Most workers will be given 90 days to look for a new position internally, Galetti said. For those who can't find a new role at the company or who opt not to look for one will be provided transitional support including severance pay, outplacement services and health insurance benefits.
Amazon has about 350,000 corporate employees and a total workforce of approximately 1.56 million. The cuts announced Tuesday amount to about a 4% reduction in its corporate workforce.
Neil Saunders, managing director of GlobalData, said in a statement that the layoffs “represent a deep cleaning of Amazon's corporate workforce.”
“Unlike the Target layoffs, Amazon is operating from a position of strength,” he said. “The company has been producing good growth, and it still has a lot of headroom for further expansion in both the U.S. and overseas.”
But Saunders noted that Amazon is not immune to outside factors, as global markets tighten and underlying costs climb.
“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,” he said.
Amazon will post quarterly financial results on Thursday.
