Amazon has announced plans to lay off nearly five percent of its corporate workforce, marking what is being referred to as the company’s ‘largest downsizing in history’.
This decision is aimed at strengthening the retail giant, which was founded by Jeff Bezos in 1994 and currently has a valuation of $2.42 trillion, according to a senior executive from the company.
As Amazon gets ready to report record third-quarter sales of approximately $179 billion (£134 billion) this Thursday, the impact of these layoffs will primarily affect its corporate sectors.
The company’s vast workforce, predominantly composed of warehouse employees, will remain mostly unaffected by this wave of job cuts.
Departments that might be impacted include Human Resources, operations, devices and services, and Amazon Web Services, as reported by Reuters.
Initial reports suggested that around 30,000 positions could be eliminated, which would make these cuts the largest in Amazon’s history since it reduced its workforce by 27,000 in late 2022.
However, in a communication to employees on Tuesday (October 28), the company clarified the actual number of job reductions.
Amazon plans to implement a total of 14,000 job ‘reductions’ as part of its restructuring strategy, which involves reducing in some areas and hiring in others.
Beth Galetti, a senior vice president at Amazon, mentioned in the note that the changes would strengthen the company by reallocating resources to focus on crucial projects and meeting customer needs both now and in the future.
Most employees affected by the layoffs will have three months to find a new position within Amazon. For those who opt to leave, the company is offering support, including severance pay, outplacement services, and health insurance benefits.
The note also conveyed that Amazon plans to continue hiring in key strategic areas while seeking opportunities to streamline operations and enhance efficiency.
Addressing potential questions about the timing and rationale behind the layoffs amid strong company performance, Galetti pointed to the rapid advancements in artificial intelligence as a significant factor.
“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,” she stated in the employee note.
“We’re convinced that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business,” she added.
Previously, in June, Amazon CEO Andy Jassy indicated that the increased use of AI tools might result in more job cuts as repetitive and routine tasks become automated.
Additionally, sources informed Reuters that a five-day, office-based working week was recently introduced but did not successfully bring workers back to their desks on-site.
This situation is reportedly contributing to the scale of the new round of job cuts, as indicated by sources cited by the publication.
They further mentioned that employees not returning to corporate offices due to distance or other reasons are being informed that they have voluntarily resigned from Amazon and must leave without severance.
The publication had reached out to Amazon for a comment on the matter.