According to a report from Morgan Stanley, Amazon is expected to cut around 14,000 managerial roles by early next year as part of an effort to save $3 billion each year. This move aligns with CEO Andy Jassy’s strategy to enhance operational efficiency by increasing the proportion of individual contributors to managers by at least 15% by March 2025.
Bloomberg reports that this initiative from the tech giant aims to simplify decision-making and remove bureaucratic obstacles.
Morgan Stanley estimates that cutting these jobs could reduce Amazon’s management staff from about 105,770 to roughly 91,936 worldwide. Given that the annual cost per manager is estimated to be between $200,000 and $350,000, this could lead to annual savings of between $2.1 billion and $3.6 billion. This reduction would represent 3% to 5% of Amazon’s expected operating profit for 2025.
Amazon has recognized its recent increase in management positions and emphasized the need to reassess team structures, but it hasn’t detailed any specific job cuts. The restructuring is intended to improve operations and reduce bureaucratic barriers, possibly achieving the desired ratio change through reassignment instead of direct layoffs.
Morgan Stanley views this strategy as beneficial for Amazon, noting in its report that eliminating layers, reducing the number of managers, and flattening the organization are all aimed at enhancing speed.
In the meantime, Amazon’s CEO has stated that the company will require employees to return to the office full-time beginning in January. This announcement comes after the company has already laid off thousands of workers in multiple rounds this year, reflecting the broader challenges facing the tech industry.
Massive layoffs in the tech industry have begun to get worse over the course of this year. From tech giants to smaller startups, the job losses faced by employees not only have an adverse impact on the workforce but also on business owners, leadership, top management and the economy as a whole. As of now there are multiple reasons like restructuring, cost-cutting, etc for this. However, most experts say that the adoption of AI could make the situation worse in the coming years. According to these experts, it’s not AI that will replace humans, but humans who have the knowledge and expertise in AI will.
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