7-10-2024 (CALIFORNIA) Tech behemoth Amazon is set to embark on a significant restructuring of its managerial workforce, according to a recent report by Morgan Stanley. The e-commerce giant is expected to slash approximately 14,000 managerial positions by early 2025, in a bid to achieve annual savings of $3 billion .
This strategic move aligns with CEO Andy Jassy’s vision to bolster operational efficiency by increasing the ratio of individual contributors to managers by at least 15% within the next 18 months. The initiative, as reported by Bloomberg, aims to streamline decision-making processes and dismantle bureaucratic hurdles that have accumulated over years of rapid expansion.
Morgan Stanley’s analysis suggests that this workforce reduction could see Amazon’s global management team shrink from roughly 105,770 to 91,936. With the annual cost per manager estimated between $200,000 and $350,000, the potential yearly savings could range from $2.1billion to $3.6 billion. This reduction would represent a notable 3% to 5% of Amazon’s projected operating profit for 2025.
While Amazon has acknowledged a recent surge in management positions and stressed the need to re-evaluate team structures, the company has yet to announce any specific job cuts. The restructuring is purportedly designed to enhance operational efficiency and reduce administrative bottlenecks, with the possibility of achieving the desired ratio adjustment through reassignment rather than outright redundancies.
Morgan Stanley views this strategy favourably, noting in its report that “eliminating layers, reducing the number of managers, and flattening the organisation are all aimed at enhancing speed.”
This news comes on the heels of Jassy’s recent mandate for employees to return to full-time office work starting January 2025. The announcement follows multiple rounds of layoffs at Amazon earlier this year, reflecting broader challenges facing the tech industry.
The tech sector has witnessed a surge in job losses throughout the year, impacting not only employees but also business owners, leadership, and the broader economy.
