Amazon may cut 14,000 manager roles by early next year in order to save $3 billion a year, media reports said citing a Morgan Stanley note.
Recently, Amazon’s CEO Andy Jassy said that the company should increase the ratio of individual contributors to managers by 15 per cent by March 2025 as part of the restructuring. This restructuring was aimed at making efficient decisions without red tape, according to a Bloomberg report.
Jassy also launched a “bureaucracy tipline,” where employees can report unnecessary procedures delaying the work, the report added.
The restructuring measure would cut down nearly 13,834 manager jobs by early 2025, saving $2.1 billion to $3.6 billion, Morgan Stanley note said.
According to the note, managerial roles are 7 per cent of Amazon’s workforce. The company had nearly 1,05,770 managers globally by the end of the second quarter of 2024. By the first quarter of 2025 the managerial roles will decrease to 91,936.
Plan afoot to slash 13,834 manager jobs
According to Morgan Stanley’s analysis cited by media reports, the estimated cost per manager is from $200,000 to $350,000 in a year. Based on these estimates, Amazon will save approximately $2.1 billion to $3.6 billion in 2025 after cutting 13,834 manager jobs.
The savings will be approximately 3 per cent to 5 per cent of the company’s estimated operating profit for next year. Amazon has over 1.5 million employees in total. Most of these employees are engaged in logistics and warehouse operations. However, Amazon has not provided a breakdown of jobs.
This move will be beneficial for Amazon, according to Morgan Stanley.
“Removing layers, operating with fewer managers and flattening the organization are all in focus to move faster,” reports said, quoting Morgan Stanley’s note.
In a related development, Amazon CEO Jassy revealed the company’s decision to bring employees back to the office full-time from January next year.
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