Amazon has announced it will cut about 14,000 corporate jobs as the online retail giant ramps up spending on artificial intelligence while cutting costs elsewhere.
In June, the company’s chief executive 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.
Mr 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.
Mr Jassy encouraged employees to get on board with the company’s AI plans after it announced plans to invest $10 billion ($15.2 billion) building a campus in North Carolina to expand its cloud computing and artificial intelligence infrastructure.
Since the start of 2024, Amazon has committed to about $US10 billion apiece to data centre projects in Mississippi, Indiana, Ohio and North Carolina as it builds up its infrastructure to tries to keep up with other tech giants making leaps in AI.
Amazon is competing with OpenAI, Google, Microsoft, Meta and others.
Amazon chief executive Andy Jassy is increasingly looking to compete in the growing field of AI. (Reuters: Brendan McDermid)
In a conference call with industry analysts in May, Mr Jassy said the potential for growth in the company’s Amazon Web Services (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.
More lay-offs possible at Amazon
Teams and individuals impacted by the job cuts were to be notified on Tuesday, local time, and comes just days after thousands of sites were knocked offline by a global AWS outage.
Most workers will be given 90 days to look for a new position internally, Beth Galetti, Senior Vice President of People Experience and Technology at Amazon, wrote in a letter to employees.
Why the AWS outage was such a big deal
For those who could not 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 four per cent reduction in its corporate workforce.
Amazon’s workforce doubled during the pandemic as millions stayed home and boosted online spending. In the following years, big tech and retail companies cut thousands of jobs to bring spending back in line.
The cuts announced Tuesday suggested Amazon was still trying to get the size of its workforce right and further lay-offs were possible.
It was the biggest culling at Amazon since 2023, when the company cut 27,000 jobs.
Those cuts came in waves, with 9,000 jobs trimmed in March of that year, and another 18,000 employees two months later.
Amazon has not said if more job cuts are on the way.
Yet the jobs market which has for years been an pillar in the US economy, is showing signs of weakening.
Lay-offs have been limited, but the same can be said for hiring.
Retailers wary amid US tariffs
Government hiring data is on hold during during the government shutdown, but earlier this month a survey by payroll company ADP showed a surprising loss of 32,000 jobs losses in the private sector in September.
Many retailers are pulling back on seasonal hiring this year due to uncertainty over the US economy and tariffs.
Amazon said this month, however, that it would hire 250,000 seasonal workers, the same as last year’s holiday season.
Amazon’s retail business is exposed to trade disruption as the US imposes tariffs on imports. (Reuters: Brendan McDermid)
Neil Saunders, managing director of GlobalData, said in a statement that the lay-offs “represent a deep cleaning of Amazon’s corporate workforce”.
“Unlike the Target lay-offs, 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 US and overseas.”
But Mr 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. During its most recent quarter, the company reported 17.5 per cent growth for its cloud computing arm Amazon Web Services.
AP
