Amazon axes 16,000 jobs as it pushes AI and efficiency

By Greg Bensinger

Jan 28 (Reuters) – Amazon confirmed 16,000 corporate job cuts on Wednesday, completing a plan for around 30,000 since October, while leaving open the possibility of further reductions.

Reuters first reported last week that Amazon was planning a second round of job cuts as part of its broader goal under CEO Andy Jassy, who has been trying to reduce bureaucracy and abandon underperforming businesses.

Amazon said on Tuesday it was closing its remaining bricks-and-mortar Fresh grocery stores and Go markets, despite years of effort, and said it was dropping its Amazon One biometric payment system, which scans the palm of a customer’s hand.

Although 30,000 represents a small portion of Amazon’s 1.58 million employees, who are mostly in fulfillment centers and warehouses, it is nearly 10% of its corporate workforce and represents the largest job cuts in its three-decades, surpassing the 27,000 it pared between late 2022 and early 2023. 

The job cuts were necessary to strengthen the company by “reducing layers, increasing ownership, and removing bureaucracy” at Amazon, its top human resources executive, Beth Galetti, said in a post.

Galetti left open the possibility of further reductions, saying some teams will continue to “make adjustments as appropriate”.

The latest cuts mark the second major round of layoffs in three months after Amazon pared 14,000 jobs in October saying at the time that artificial intelligence and concerns over shifting corporate culture were to blame.

Amazon has also said it overhired during the COVID-19 pandemic, when demand for online shopping skyrocketed.

“Some of you might ask if this is the beginning of a new rhythm – where we announce broad reductions every few months,” Galetti said in Wednesday’s note. “That’s not our plan,” she said.

‘PROJECT DAWN’

Amazon on Tuesday mistakenly sent an email appearing to refer to the layoff plan as “Project Dawn” to some Amazon Web Services staff, unsettling thousands of workers.

The full scope of the cuts could not be learned, but employees from multiple AWS units, the Alexa voice assistant, Prime Video, devices, advertising and last mile delivery, among others, indicated online and in emails to Reuters that they had be impacted.

Amazon, which began the corporate job cuts on Tuesday by announcing its plans to close the Fresh and Go stores, did not respond to a Reuters request for comment.

The job cuts also underscore how artificial intelligence is changing corporate workforce dynamics. Significant improvements in AI assistants are helping enterprises execute duties from routine administrative tasks to complex coding problems with rapid speed and precision, driving widespread adoption.

Jassy said last summer that rising use of AI tools would mean more automation of duties, leading to corporate job losses.

Executives at the World Economic Forum’s annual meeting in Davos said last week that while jobs would disappear, new ones would spring up, with two telling Reuters that AI would be used as an excuse by companies planning to cut jobs anyway.

Tech giants, including Amazon, Facebook-parent Meta Platforms and Microsoft, sharply ramped up hiring during the COVID-19 pandemic demand surge and have lately been restructuring. UPS, Pinterest and ASML all announced staff reductions in recent days. 

Amazon has been investing in robotics at its warehouses to speed up packaging and deliveries for its e-commerce segment, reduce reliance on human labor and cut costs.

Shares in Amazon, which is set to report quarterly results next week, were up less than 1% in pre-market trading. 

(Reporting by Deborah Sophia and Zaheer Kachwala in Bengaluru; Editing by Arun Koyyur and Alexander Smith)