Amazon CEO warns AI will shrink workforce as tech replaces routine work

Amazon CEO Andy Jassy has acknowledged that the rapid adoption of generative artificial intelligence is set to reduce the number of employees needed for certain roles, as computers increasingly handle tasks traditionally performed by humans.

“Like with every technical transformation, there will be fewer people doing some of the jobs that the technology actually starts to automate,” Jassy told CNBC’s Jim Cramer in an interview on Monday. “But there’s going to be other jobs.”

The shift comes amid growing competition for top AI talent. Just a couple of days ago, Amazon lost a key vice president helping oversee generative artificial intelligence development and the company’s Bedrock service, as the competition for talent heats up.

Vasi Philomin said that he left Amazon for another company, without providing specifics. A company spokesperson confirmed that Philomin had recently left after eight years with Amazon. Philomin helped lead generative AI efforts and product strategy, and oversaw foundation models known as Amazon Titan.

Reports indicate that Rajesh Sheth, a vice president previously overseeing Amazon Elastic Block Store, had assumed some of Philomin’s responsibilities. Philomin left Amazon earlier in June.

Tech leaders embrace AI as workforce shifts toward innovation and efficiency

While AI is expected to eliminate some positions, Jassy emphasized that Amazon will continue expanding its workforce in AI, robotics, and advanced technologies. He noted that the shift will allow employees to move away from repetitive tasks and instead focus on more innovative and engaging work.

Just recently, Jassy noted that he expects the company’s workforce to decline in the next few years as Amazon embraces generative AI and AI-powered software agents. He told staffers in a memo that it would be “hard to know exactly where this nets out over time” but that the corporate workforce would shrink as Amazon wrings more efficiency out of the technology.

The message is resonating across the tech industry. Salesforce CEO Marc Benioff recently stated that AI now handles between 30% and 50% of the workload at his company. Meanwhile, Shopify and Microsoft encourage employees to integrate AI into their daily tasks. Klarna’s CEO noted in May that the company has reduced its workforce by approximately 40%, attributing the decline partly to AI adoption and natural staff turnover.

According to Jassy, AI will free employees from routine and “make all our jobs more interesting,” while enabling staffers to invent better services more quickly than before.

AI-driven efficiencies fuel job cuts and mixed market performance across tech sector

Amazon and other tech companies have also been shrinking their workforces through layoffs over the past several years. Amazon has cut more than 27,000 jobs since the start of 2022, and it has announced smaller, more targeted layoffs in its retail and devices units in recent months.

Amazon shares are flat this year, underperforming the Nasdaq, which has gained 5.5%. The stock is about 10% below its record reached in February, while fellow megacaps Meta, Microsoft, and Nvidia are all trading at or near record highs.

BT Group Chief Executive Allison Kirkby notes that the progress in artificial intelligence could deepen significant job cuts at the British telecoms company, the Financial Times reported on Sunday.

Kirkby told the newspaper that BT’s plans to cull more than 40,000 jobs and strip out 3 billion pounds ($4 billion) of costs by the end of the decade “did not reflect the full potential of AI”.

“Depending on what we learn from AI … there may be an opportunity for BT to be even smaller by the end of the decade,” Allison Kirkby said.

Amazon is working to bolster its reputation in AI development, after rivals like OpenAI and Google have taken an early lead, particularly with consumer-focused models.