Amazon could cut 14,000 managers and save $3 billion: analysts

• Morgan Stanley estimates that Amazon may cut 13,834 managers and save about $3 billion next year.
• CEO Andy Jassy said he wants to change the ratio of individual contributors to managers.
• He targets red tape throughout Amazon’s massive workforce.

Amazon’s plan to have fewer managers could lead to huge job cuts and cost savings.

CEO Andy Jassy said last month that he wants to increase the ratio of individual contributors to managers by at least 15 percent by the end of the first quarter of 2025. Jassy argued that having fewer managers would remove unnecessary organizational layers and help Amazon to move faster without red tape.

In a note published Thursday, Morgan Stanley estimated that the effort could lead to the elimination of about 13,834 managerial positions by early next year, resulting in cost savings of $2.1 billion to 3 .6 billion dollars.

The estimate assumes that 7% of Amazon’s workforce is in management positions. At the end of the second quarter, Amazon had about 105,770 managers globally; which would fall to 91,936 in the first quarter of next year, based on Morgan Stanley estimates. Amazon does not publicly disclose a breakdown of its workforce.

Amazon told Business Insider that it has “added a lot of managers” in recent years and that “now is the right time” to make that change. Each team at Amazon will review its structure, and organizations may eliminate roles that are no longer needed, the company said, adding that the change is about “strengthening our culture and organizations.” He declined to comment on Morgan Stanley’s specific forecasts.

Morgan Stanley assumed the cost per manager was $200,000 to $350,000 per year. Based on those numbers, Amazon could save $2.1 billion to $3.6 billion next year if it cut those 13,834 managerial roles. Morgan Stanley estimated the savings would represent about 3% to 5% of Amazon’s estimated 2025 operating profit.

Amazon has more than 1.5 million employees in total, many of whom work in the company’s warehouses and logistics operations and are not part of the corporate workforce.

The company could change the ratio of individual contributors to managers through other methods beyond job cuts. Managers might take on new roles, for example.

Still, Morgan Stanley sees a huge opportunity for Amazon to become more efficient with these big moves.

“Removing layers, operating with fewer managers and flattening the organization are all in focus to move faster,” the memo said.

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