Amazon cuts 16,000 corporate jobs, undoing pandemic-era hiring amid AI push

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

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.

Reuters first reported last week that Amazon was planning a second round of job cuts as part of the broader goal.

The 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 losses, 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.

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.

Rising AI adoption

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.

Amazon CEO Andy Jassy said last summer that the increased use of AI tools would lead to more automation of duties, resulting in 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, had sharply ramped up hiring during the COVID-19 pandemic demand surge and have lately been restructuring their workforce.

Amazon began the cuts on Tuesday by announcing it planned to close all remaining brick-and-mortar Fresh grocery stores and Go markets, a further retreat from its physical store strategy.

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

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