Amazon eyes managerial layoffs to cut costs, report
New plans intended to simplify decision-making at the company for 2025
Amazon is reportedly preparing to cut up to 14,000 managerial positions by early next year, in a move aimed at saving the company around $3 billion annually.
According to a Morgan Stanley report, as reported by Bloomberg, the job reductions are part of CEO Andy Jassy's strategy to enhance operational efficiency by increasing the ratio of individual contributors to managers to at least 15% by March 2025.
The plan is intended to simplify decision-making and reduce bureaucracy within the tech giant.
Jassy has emphasised the need for Amazon to operate with a sense of urgency, focusing on accountability, swift decision-making, and resourcefulness. He also introduced a "bureaucracy tipline," enabling employees to flag unnecessary procedures that slow down their work.
Reducing Amazon’s global management workforce
Morgan Stanley estimates that the restructuring could reduce Amazon's global management workforce from approximately 105,770 to 91,936, as the average annual cost per manager is estimated to range from $200,000 to $350,000.
The cuts would potentially contribute between $2.1 billion and $3.6 billion in savings, representing around three to five per cent of the company’s projected 2025 operating profit.
Although Amazon has acknowledged that its management ranks have expanded, it has not confirmed any specific job cuts. Instead, the company suggests that changes to team structures, including reassignment rather than layoffs, could help achieve the desired efficiency improvements.
Morgan Stanley's report describes the restructuring as a positive step, stating that reducing management layers and flattening the organisation will help Amazon move faster and remain competitive.
Jassy also announced that Amazon would require staff to return to the office full-time from January 2024. This follows several rounds of layoffs earlier this year, as the broader tech industry continues to face economic pressures.