Amazon is reportedly planning to cut 14,000 managerial positions by early 2025 as part of CEO Andy Jassy’s efforts to streamline operations and enhance cost efficiency.
According to a Morgan Stanley report, this strategic move aims to save Amazon up to $3 billion annually, by reducing the number of management layers and increasing the ratio of individual contributors to managers by at least 15% by March 2025.
This initiative is designed to cut down on bureaucratic hurdles and make decision-making more agile, a key component of Jassy’s broader vision to position Amazon as the world’s largest e-commerce. Bloomberg reports that the reduction in managerial roles will help flatten the company’s structure, enabling quicker and more efficient decision-making.
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Morgan Stanley’s analysis estimates that the planned reduction will shrink Amazon’s global management workforce from around 105,770 to roughly 91,936, cutting managerial costs significantly. The report notes that each manager at Amazon costs between $200,000 and $350,000 annually, meaning the job cuts could lead to savings between $2.1 billion and $3.6 billion annually. These savings would account for 3% to 5% of Amazon’s projected operating profit for 2025.
While Amazon has acknowledged the growing size of its management team and the need for a review of its organizational structure, the company has not confirmed any specific number of job cuts. It is believed that the company may achieve its target ratio by reassigning managers to other roles or restructuring teams, minimizing the need for direct layoffs. However, given the scale of the reduction, many anticipate that a substantial portion of these roles will be eliminated outright.
CEO Andy Jassy has emphasized the importance of creating a leaner, faster-moving company. One of his most notable moves was the introduction of a “bureaucracy tipline,” which allows employees to report unnecessary procedures or inefficiencies that impede their work. This initiative is part of a broader effort to eliminate waste and foster a startup-like culture, even within a massive organization like Amazon.
Jassy’s push to flatten the organization comes at a time when Amazon, like many tech companies, is contending with economic challenges. The company has already implemented several rounds of layoffs this year, affecting thousands of employees across various departments. These layoffs are part of a broader trend in the tech industry, where companies are grappling with slowing revenue growth and rising costs after years of rapid expansion.
Morgan Stanley’s report suggests that these managerial cuts will be advantageous for Amazon in the long run. The report notes that removing layers, operating with fewer managers, and flattening the organization are all in focus to move faster.
In addition to the layoffs, Jassy recently announced that Amazon will require employees to return to the office full-time starting in January 2025. This move marks a shift from the company’s flexible remote work policies implemented during the pandemic. The decision to bring employees back to the office is part of a broader industry trend, as many companies in the tech sector attempt to foster in-person collaboration and improve team dynamics.
Reshaping the Workforce Through Automation and AI
Amazon has been at the forefront of automating various operational roles, and this push toward AI integration is a key part of the company’s strategy to reduce its reliance on human labor. The company has already implemented AI-driven systems in its warehouses, customer service, and logistics departments, significantly cutting down on the number of employees needed to manage these processes.
This trend toward automation is not unique to Amazon. Across the tech sector, companies are increasingly adopting AI and machine learning to streamline processes, improve decision-making, and reduce the need for human workers.
Over the past two years, major companies like Meta, Google, Microsoft, and others have significantly cut staff as part of efforts to reduce costs amid slowing growth and increased competition. Many of these companies have similarly incorporated AI to handle tasks traditionally managed by humans, from customer service to data analysis and product recommendations.
This shift toward automation has been driven by several factors, including the growing capabilities of AI, economic headwinds, and increased pressure from shareholders to improve profitability. The pandemic, which initially led to rapid expansion and increased hiring across the tech industry, has since given way to a more cautious approach. Companies are now focusing on doing more with fewer employees, using technology to fill in the gaps where human labor once dominated.
The shift toward automation is expected to continue in the coming years, with many companies signaling further workforce reductions as they adopt more advanced AI tools. According to industry analysts, 2024 and 2025 are likely to see even more job cuts across the tech sector, as companies implement more sophisticated AI systems that can perform tasks once handled by human workers.
A report by the World Economic Forum (WEF) estimates that by 2025, 85 million jobs could be displaced by automation globally, although 97 million new roles may emerge as companies shift towards a more digital and AI-driven economy.
This trend is particularly evident in industries that rely heavily on logistics, data processing, and customer service — all areas where Amazon has been investing heavily in AI. The company’s continued push to automate its warehouses, delivery networks, and customer interactions is likely to lead to further job cuts, particularly in roles that are easily replaced by machines.