Morgan Stanley: Amazon could soon purge thousands of managers

According to investment bank Morgan Stanley, e-commerce giant Amazon might soon eliminate nearly 14,000 manager roles to save billions of dollars.

Amazon CEO Andy Jassy already delivered some bad news to the company’s employees in mid-September when he said that workers would be required to be in the office five days a week starting in January.

The note from Jassy, shared with employees, said that the management had observed that it’s easier for the company’s employees to learn, model, practice, and strengthen Amazon’s culture if workers are back in the office.

However, that same note also suggests that Jassy envisions a leaner company in the near future – at least, that’s how Morgan Stanley is interpreting Jessy’s remark that each senior leadership team should “increase the ratio of individual contributors to managers by at least 15%” by the end of Q1 2025.

“Having fewer managers will remove layers and flatten organizations more than they are today,” said the Amazon CEO.

According to Morgan Stanley’s estimates published in a recent note to investors, this could lead to the elimination of roughly 13,834 manager roles by early 2025 and result in savings of $2.1 billion to $3.6 billion.

The bank assumes that seven percent of Amazon's workforce is in management positions. At the end of Q2 2024, Amazon had about 105,770 managers globally, but that would drop to 91,936 in Q1 2025. The company itself doesn’t publicly disclose a breakdown of its workforce.

Morgan Stanley also estimates that the cost per manager was $200,000 to $350,000 a year. The projected savings – when and if all these managers are let go – would account for 3% to 5% of Amazon’s operating profit for 2025.

Of course, the e-commerce giant could send the managers to take on new roles. However, Morgan Stanley says Amazon, which has more than 1.5 million employees, may use the opportunity to become more efficient.

Another tech corporation, Meta, laid off more than 20,000 employees in 2023, which CEO Mark Zuckerberg dubbed “the year of efficiency.” According to Business Insider, Zuckerberg also privately said he no longer wanted a company of “managers managing managers.”