Amazon Announces Major Layoffs Amid AI Integration Plans

SAN FRANCISCO, Oct 27 (Reuters) – Amazon is set to lay off as many as 30,000 corporate employees starting Tuesday as part of a strategy to cut costs and streamline its workforce. This drastic move comes in response to overhiring during the COVID-19 pandemic and aims to position the company for a stronger future amid increased competition and rising costs.

According to three sources familiar with the matter, the layoffs will primarily impact Amazon’s 350,000 corporate employees, resulting in nearly a 10% reduction. This marks Amazon’s largest job cut since late 2022 when the company eliminated around 27,000 positions.

Amazon has been making smaller layoffs over the last two years in various sectors, including its devices, communications, and podcasting divisions. The upcoming cuts could affect several departments, including People Experience and Technology (PXT), operations, Amazon Web Services (AWS), and devices.

Management teams have been preparing to inform affected employees, with training sessions held for leaders on connecting with staff following the announcement. These notifications are scheduled to begin on Tuesday morning.

CEO Andy Jassy is advocating for reducing bureaucracy and aims to address inefficiencies linked to management structures. Earlier this year, Jassy implemented an anonymous complaint system that received over 1,500 responses, leading to more than 450 process changes.

Experts like Sky Canaves of eMarketer believe the layoffs are a reflection of Amazon capitalizing on AI productivity and shifting operational needs. Jassy acknowledged that advancements in artificial intelligence could prompt further job reductions by enabling automation of routine tasks.

Despite Amazon’s caution in attributing current job cuts primarily to AI, it is clear that the company is reshaping its workforce to better align with future technological trends. The current layoffs are part of a broader trend in corporate America where businesses are signaling changing economic conditions by tightening their workforce amidst uncertain economic forecasts.

As this round of layoffs unfolds, the exact scope remains subject to change based on the company’s evolving financial priorities. Reports suggest that the human resources division may face cuts of up to 15%.

While Amazon anticipates a strong holiday season ahead, past efforts to bring employees back to the office have not yielded desired results, with some reports suggesting that employees not meeting in-office expectations have been labeled as voluntarily quitting, avoiding severance costs.

In recent data, tech companies have witnessed significant layoffs, reflecting broader labor market challenges. This year alone, Layoffs.fyi reports approximately 98,000 job losses in the tech sector, raising questions of job security among the workforce.