Amazon cuts 14,000 corporate jobs to spend more on AI
Amazon will cut about 14,000 corporate jobs as the online retail giant increases spending on artificial intelligence while cutting costs elsewhere.
CEO Andy Jassy, who has aggressively sought to cut costs since becoming CEO in 2021, said in June that he anticipated generative AI would reduce Amazon’s corporate workforce over the next few years.
CBC News contacted an Amazon spokesperson to ask if any Canadian workers are affected by the layoffs and did not receive a response.
Jassy said at the time that Amazon had more than 1,000 generative AI services and applications in progress or built, but that the figure was a “small fraction” of its plan.
Jassy encouraged employees to get involved with the company’s AI plans. Earlier that month, Amazon announced that it planned to invest US$10 billion in building a campus in North Carolina to expand its cloud computing and AI infrastructure.
Since 2024 begins, Amazon has committed nearly $10 billion 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 with giants like OpenAI, Google and Microsoft in the AI field. In a conference call with industry analysts in May, Jassy said there was great potential for growth in the company’s AWS business.
“If you believe that your mission is to make customers’ lives easier and better every day, and you believe that every customer experience will be reinvented with AI, then you are going to invest very aggressively in AI, and that’s what we’re doing,” he said.
Beth Galetti, senior vice president of people experience and technology at Amazon, said in a message to employees Tuesday that the online giant is reducing bureaucracy and “shifting resources.”
Teams and individuals affected by the job cuts will be notified on Tuesday. Most employees will be given 90 days to search for new positions internally, Galetti said. Those who are unable to find a new role with the company or choose not to look for a job will be provided with transitional assistance, including severance pay, outplacement services and health insurance benefits.
Global workforce of over one million
Amazon has approximately 350,000 corporate employees and a total workforce of approximately 1.56 million. The cuts announced Tuesday will reduce its corporate workforce by about four percent.
Amazon’s workforce doubled during the pandemic as millions of people stayed home and boosted online spending. Over the following years, big tech and retail companies cut thousands of jobs to get spending back on track.
The cuts announced Tuesday show that Amazon is still trying to get the size of its workforce right and it may not be over. It was the biggest layoffs at Amazon since 2023, when the company cut 27,000 jobs. Amazon has not said whether more jobs are going to be cut.
Yet the jobs market, which has been a pillar of the US economy for years, is showing signs of weakening. Layoffs have been limited, but the same can be said about hiring.
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Government data on hiring has been halted during the government shutdown, but earlier this month, a survey from payroll company ADP found a surprise loss of 32,000 private sector jobs in September.
Many retailers are pulling back from seasonal appointments this year due to uncertainty over the US economy and tariffs. However, Amazon said this month it would hire 250,000 seasonal workers, the same amount as during last year’s holiday season.
Neil Saunders, managing director of GlobalData, said in a statement that the layoffs “represent a deep cleanup of Amazon’s corporate workforce.”
“Unlike the targeted layoffs, Amazon is operating from a position of strength,” he said. “The company is growing well, and still has plenty of room for further expansion both in the US and abroad.”
Amazon will release quarterly financial results on Thursday. During its most recent quarter, the company reported 17.5 percent growth for its cloud computing arm Amazon Web Services.
But Saunders said Amazon is not immune to external factors, as global markets tighten and underlying costs rise.
“It needs to take action if it wants to continue to perform well. This is especially given the investments the company is making in areas such as logistics and AI,” he said.
“In some ways, this is a turning point from human capital to technological infrastructure.”
