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The world’s leading e-commerce company Amazon plans to cut about 30,000 corporate jobs from Tuesday. This step is being taken to reduce the company’s costs and to compensate for the excess appointments made during the Covid-19 pandemic. According to experts, this layoff is a small part of Amazon’s total 15.5 lakh employees, but will affect about 10 percent of its 3.5 lakh corporate employees.

Why are the cuts happening?

Amazon has been continuously reducing the number of employees in various departments such as devices, communications, podcasting, operations and web services (AWS) for the last two years. This time the layoffs will be done mainly in Human Resources (PXT), Operations and Technology divisions. Managers of affected departments were told on Monday how to communicate with employees following an email notification sent Tuesday morning.

Less bureaucracy, more efficiency

Amazon CEO Andy Jassy has started a special initiative to reduce the increasing bureaucracy in the organization. Under this, the number of managers is being reduced and an anonymous complaints mechanism has been created, which has so far received more than 1,500 responses and more than 450 procedural changes have been made. JC believes that increasing the use of Artificial Intelligence (AI) will reduce the need for repetitive tasks in the company, thereby reducing dependence on employees.

Decreasing jobs due to AI

According to eMarketer analyst Sky Canaves, AI-powered productivity at Amazon is increasing so much that it has become possible to reduce the number of employees in corporate teams. He said that Amazon is under pressure to recoup the huge investment made in its AI infrastructure, due to which the company is resorting to layoffs in the short term.

Most impact on human resources department

According to a report, about 15 percent of the employees in the human resources department may be laid off. It was also told that the company had ordered its employees to come to office five days a week at the beginning of this year. Many employees could not follow this rule, due to which they are being fired considering it as “voluntary resignation”, which is resulting in financial benefit to the company.

Wave of layoffs in tech sector

According to Layoffs.fyi, around 98,000 jobs have been lost in 216 tech companies so far this year. This number would reach 1.53 lakh in 2024, which shows that employment in the technical sector remains unstable.

AWS’s slow growth

Amazon’s most profitable unit, AWS (Amazon Web Services), had sales of $30.9 billion in the second quarter, an increase of 17.5%, but significantly lower than Microsoft Azure (39%) and Google Cloud (32%). Its sales are expected to increase by 18% in the third quarter, which is slightly less than last year. Recently AWS faced a 15-hour internet outage, which affected services like Snapchat and Venmo.

temporary jobs during festive season

However, Amazon is optimistic about the upcoming festive season. The company has announced 2.5 lakh seasonal jobs, which is the same as in the last two years. Additionally, some employees have been given new roles as part of diversity initiatives at the PXT unit.

Investors’ hopes remain intact

Despite the news of layoffs, Amazon shares rose 1.2% to $226.97 on Monday. The company is scheduled to announce its third quarter results on Thursday, due to which investors are hoping that AI and restructuring strategy will increase the company’s profits.