During the company's quarterly earnings call on Thursday, CEO Andy Jassy addressed the recent layoffs at Amazon, emphasizing that the decision was primarily about a mismatched cultural fit rather than financial or AI-driven factors. Jassy stated, “The announcement that we made a few days ago was not really financially driven, and it’s not even really AI-driven, not right now at least,” highlighting that the layoffs were fundamentally about company culture.
The job cuts, which predominantly affected middle managers, follow a memo issued by Jassy in June. In this memo, he indicated that Amazon would require fewer employees due to the efficiency gains attributed to AI technology. A separate announcement from Amazon's senior vice president of people reiterated that these layoffs were part of a broader strategy to adapt to “transformative technology.”
Jassy also pointed out that despite the layoffs, Amazon's business has seen significant growth over the years. Currently, the company employs approximately 1.55 million people, including around 350,000 in corporate roles. This is a marked increase from December 2019 when the workforce stood at 798,000, according to a filing with the Securities and Exchange Commission.
He explained that rapid growth can lead to a workforce that is larger than necessary, resulting in multiple layers of management. “If you grow as fast as we did for several years, the size of businesses, the number of people, the number of locations, the types of businesses you’re in, you end up with a lot more people than what you had before,” he noted. This growth can create challenges, as Jassy pointed out that it may inadvertently weaken the sense of ownership among employees who are responsible for critical decisions.
Amazon's layoffs align with a trend seen across various industries, as major companies like Salesforce, Target, and Paramount have also laid off thousands of workers in recent months. Fed Chairman Jerome Powell mentioned this week that many large corporations are citing AI as a reason for hiring freezes or layoffs. However, a recent study by Goldman Sachs revealed that only 11% of their corporate clients are actively laying off workers due to AI. In contrast, about one-third of companies within the technology, media, and telecommunications sectors are reducing their workforce because of AI advancements.
During the earnings call, Jassy reiterated that the current technological transformation necessitates that companies remain agile and adaptable. He emphasized, “It’s important to be lean, it’s important to be flat, and it’s important to move fast,” reinforcing Amazon's commitment to an evolving workforce strategy. “That’s what we’re going to do,” Jassy concluded, indicating a future that is focused on efficiency and cultural alignment.
