Amazon is reportedly set to eliminate 14,000 managerial positions by early next year as part of a broader effort to save $3 billion annually, according to a Morgan Stanley report. This move is part of 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. The goal, as reported by Bloomberg, is to streamline decision-making and reduce bureaucratic obstacles.
Jassy has emphasized the need to cultivate a culture defined by urgency, accountability, resourcefulness, frugality, collaboration, and swift decision-making, with the vision of positioning Amazon as the world’s largest startup. To support this effort, Jassy has also introduced a “bureaucracy tipline” where employees can report unnecessary procedures that hinder their work.
Morgan Stanley estimates that reducing the managerial workforce from around 105,770 to approximately 91,936 globally could generate annual savings between $2.1 billion and $3.6 billion, given that the annual cost per manager ranges from $200,000 to $350,000. This reduction could account for 3% to 5% of Amazon’s projected operating profit for 2025. While Amazon has acknowledged the need to reassess its management structure, the company has not yet confirmed specific job cuts, indicating that the target ratio might be achieved through reassignment rather than layoffs.
Morgan Stanley’s report suggests that these changes will benefit Amazon in the long run, stating, “Removing layers, operating with fewer managers and flattening the organization are all in focus to move faster.”
Additionally, Jassy announced that Amazon plans to require employees to return to the office full-time starting in January next year. This announcement follows several rounds of layoffs this year, as the tech industry continues to face challenging conditions.
