Tech giant aims to streamline operations and save up to $3.6 billion annually
Amazon is set to eliminate approximately 14,000 managerial positions by early 2025 as part of a large-scale restructuring effort aimed at improving efficiency and reducing costs. This decision is expected to save the company between $2.1 billion and $3.6 billion per year. The reduction accounts for nearly 13% of Amazon’s global management workforce, bringing the number of managers down from 105,770 to around 91,936.
Restructuring for Greater Efficiency
The move follows a series of recent layoffs across Amazon’s communication and sustainability divisions. According to Business Insider, CEO Andy Jassy has outlined a strategic plan to simplify decision-making by increasing the ratio of individual contributors to managers by at least 15% by the first quarter of 2025. The goal is to cut bureaucracy, enhance operational speed, and ensure a more streamlined workforce.
A Morgan Stanley report estimates that approximately 13,834 managerial roles will be eliminated, contributing to Amazon’s broader cost-cutting and restructuring efforts.
New Workforce Policies and Cost-Cutting Measures
To support its restructuring goals, Amazon has introduced several efficiency-focused policies, including:
– Bureaucracy Tipline: Employees can report inefficiencies within the company.
– Increased Direct Reports: Managers are expected to handle larger teams.
– Hiring Restrictions: Limits on senior-level hires to control workforce expansion.
– Pay Structure Reviews:Evaluations to optimize compensation strategies.
These measures align with Amazon’s broader initiative to improve profitability. The company has also discontinued several programs, such as the “Try Before You Buy” clothing initiative and certain rapid delivery services for physical stores.
Amazon’s Workforce Evolution
Amazon experienced significant workforce expansion during the pandemic, growing from 798,000 employees in 2019 to over 1.6 million by the end of 2021. However, as economic conditions shifted, the company adjusted its staffing approach. Previous rounds of layoffs in 2022 and 2023 resulted in around 27,000 job cuts.
This latest restructuring underscores Amazon’s ongoing efforts to refine its business model, focusing on sustainable growth while maintaining operational efficiency. The impact of these layoffs on Amazon’s long-term performance remains to be seen, but they signal a shift towards a leaner management structure in the world’s largest e-commerce and cloud computing company.
