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Amazon will reduce its total workforce as more tasks are taken on by artificial intelligence, according to a blog post published by CEO Andy Jassy on Tuesday. Jassy said the e-commerce giant “will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs.”
He prefaced this bombshell by going through all the ways AI has improved Amazon products and services, such as Alexa+, the shopping features “Lens” and “Buy for Me,” and Amazon Web Services innovations like Trainium2 and Bedrock. Internally, Amazon is using robots at fulfilment centres and AI to manage inventory and forecast demand.
Jassy also noted that Amazon will continue to evolve, both due to the emerging capabilities of AI agents, which are expected to accelerate internal processes and innovation, and because the company aims to maintain a fast-paced, startup-like approach to its operations.
“It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company,” Jassy wrote in the blog.
Many companies, including Duolingo, Salesforce, Shopify, and Klarna, have already taken the opportunity to reduce their headcounts after integrating AI. OpenAI CEO Sam Altman recently predicted that “whole classes of jobs” will disappear in the 2030s as a result of advances in technology, which could include traditionally skilled roles like banking.
Tech giants are competing for AI supremacy, and internal efficiency is their winning formula
Amazon is no stranger to layoffs. It was among the companies that rapidly expanded hiring to meet the surge in demand for online shopping and home technology during the pandemic, only to find itself overstaffed once that demand subsided. As a result, over 100,000 jobs were cut in 2022 at Amazon, Google, Meta, and others.
Since then, the company has been laser-focused on efficiency gains, in part to keep pace with other tech giants pursuing similar AI initiatives. They all recognise this early stage of AI development as a critical window to move quickly and secure a leading position, but this has resulted in a tense, high-stakes workplace culture.
In March, one Amazon employee told Business Insider that there is “lots of pressure to perform the jobs of multiple people at the mercy of ruthless middle management.” Since September, Jassy’s company has been actively working to increase the ratio of contributors to managers by 15% so that the latter can move more quickly.
Google also cut manager and vice president roles by 10% for the same reason, according to Business Insider. Microsoft laid off 3% of its workforce last month, focusing on both managerial positions and software developers. While it has not directly linked the move to AI, Microsoft is writing up to 30% of coding projects with generative tools.
But some companies want to keep the human touch
While this relentless pursuit of efficiency has led some companies to replace staff with AI, not all are following suit. Google has reduced its number of managers, but Alphabet CEO Sundar Pichai plans to continue hiring new engineers as AI “allows us to do more.”
Research has also found that 55% of companies that laid off staff due to automation now regret the decision. Klarna CEO Sebastian Siemiatkowski told Bloomberg that he realised it was “critical that you are clear to your customer that there will always be a human if you want” after AI-related layoffs. This was a big turnaround, as Siemiatkowski had previously believed AI could handle all human jobs.
There is evidence that, at a certain level, company AI use can have diminishing returns. Last year, Carnegie Mellon University created a simulated company staffed entirely by AI agents from leading tech firms to assess their performance in real-world office tasks. The results revealed that even the most advanced AI models struggled significantly, with the top performer, Claude 3.5 Sonnet, completing less than 25% of its assignments.
A growing number of workers are pushing back as well. A March study found that 31% of employees have refused to use AI tools or outputs, with their reluctance to adopt the technology stemming from fears of job displacement and dissatisfaction with the tools provided.
Read eWeek’s coverage of how workers can stay employed in the age of AI, which highlights key strategies for adapting to automation and evolving job demands.