Is artificial intelligence to blame for Amazon job cuts?

Multinational technology company Amazon is laying off about 14,000 employees, the company has confirmed. A message sent out to staff on the company’s website followed media reports that the group was planning 30,000 job cuts.

News of the layoffs on Tuesday came just a few months after CEO Andrew Jassy said the rollout of artificial intelligence (AI) technology was likely to spell job cuts. He also launched an “inefficiencies initiative” in which he invited workers to report unnecessary bureaucracy and inefficiencies that could be targeted for cost savings.

What has happened?

Multiple news outlets reported on Monday that Amazon, based in Seattle, Washington, in the United States, was planning to lay off 30,000 corporate employees, quoting unnamed sources familiar with the matter.

On Tuesday, in a message sent to Amazon employees, Beth Galetti, senior vice president of people experience and technology at Amazon, stated the workforce would be reduced by 14,000 jobs.

“We’re working hard to support everyone whose role is impacted, including offering most employees 90 days to look for a new role internally,” she wrote.

Why is Amazon doing this?

The company wants to reduce overhead and is also adjusting its workforce after hiring too many employees to meet peak demand during the COVID-19 pandemic, according to three sources familiar with the matter, the Reuters news agency reported.

In 2020, during COVID-19 lockdowns in many countries, there was a surge in online shopping. To meet demand, Amazon went on a hiring binge, employing an average of 1,400 new workers per day at one point. From January to October 2020, Amazon hired 427,300 new people, increasing its workforce to more than 1.2 million people globally, which was more than a 50 percent rise from the previous year.

“Some may ask why we’re reducing roles when the company is performing well. Across our businesses, we’re delivering great customer experiences every day, innovating at a rapid rate, and producing strong business results. What we need to remember is that the world is changing quickly,” Galetti wrote in her message to staff,

“This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before (in existing market segments and altogether new ones). … We need to be organised more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business.”

How significant are these job cuts?

The job losses are all coming from Amazon’s corporate departments. Besides corporate employees, Amazon employs technicians, labourers, craft workers and service workers, who remain unaffected for now.

Against the bigger picture of about 1.55 million total employees, the loss of 14,000 workers – or 30,000 if media reports are accurate – seems of little significance. However, even at 14,000, this would make up 4 percent of Amazon’s 350,000 corporate employees.

This marks the company’s largest job cut since 2022 when it reduced its workforce by 27,000 employees.

What is Jassy’s ‘inefficiencies initiative’?

Amazon’s CEO has previously said he would consider job losses as a way of reducing bureaucracy within the company. This includes reducing the number of managers.

In September 2024, Jassy announced the launch of a “Bureaucracy Mailbox” for Amazon employees to report any instances of unnecessary bureaucracy or “excessive processes”. So far, it has received about 1,500 responses, which have resulted in more than 450 process changes, he has said.

He also had told staff that he advised each of Amazon’s senior leadership teams to increase the ratio of employees to managers by at least 15 percent by the end of the first quarter of 2025. This ultimately means he is aiming to have fewer managers responsible for more workers.

Is AI to blame for the job losses?

It may be, yes. In June, Jassy sent out a message to Amazon employees stating he expects that fewer people will be required to do some jobs as a result of the rollout of the technology.

“As we roll out more Generative AI and agents, it should change the way our work is done. We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs,” Jassy wrote in the statement, published on Amazon’s website.

“It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”

The same month, Jassy told the CNBC TV network in an interview: “Like with every technical transformation, there will be fewer people doing some of the jobs that the technology actually starts to automate.”

Amazon and other tech groups will also be looking to recoup investments they have made in developing AI infrastructure, analysts said.

Sky Canaves, an analyst at eMarketer, told Reuters: “This latest move signals that Amazon is likely realising enough AI-driven productivity gains within corporate teams to support a substantial reduction in force. Amazon has also been under pressure in the short term to offset the long-term investments in building out its AI infrastructure.”

What sorts of jobs are more vulnerable to advances in AI?

In July, Microsoft released a research paper listing 40 jobs that are most likely to be replaced by AI alongside 40 jobs that are safe from being replaced by AI.

The jobs expected to be lost include interpreters and translators, passenger attendants, sales representatives of services, writers and authors, customer service representatives, telephone operators, ticket agents, telemarketers, concierges, political scientists, news analysts, journalists, mathematicians, technical writers, proofreaders and market research analysts.

Some of the jobs it deems safe from being replaced are phlebotomists, nursing assistants, painters, embalmers, oral and maxillofacial surgeons, tyre repairers and changers, highway maintenance workers, ophthalmic medical technicians, massage therapists, surgical assistants and dredge operators.