• Amazon and Microsoft cut jobs as AI use grows.
• Microsoft plans layoffs in July.

Amazon and Microsoft are making workforce cuts as they pour more money into artificial intelligence. Both companies are shifting how work gets done internally, and that shift is starting to show up in headcount reductions, office relocations, and reorganisations.

Amazon CEO Andy Jassy told employees in a recent memo that the company expects to have fewer roles in the future as AI tools take over some tasks. “As we roll out more Generative AI and agents, it should change the way our work is done,” Jassy wrote. “We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs.”

He added that it’s too early to say exactly how this shift will play out, but over the next few years, Amazon expects its corporate workforce to shrink. That’s mainly because AI is helping the company find new efficiencies in its operations.

One of the areas seeing more AI integration is logistics. Jassy said Amazon is already using generative AI for internal tasks like inventory planning and demand forecasting. The tools may the company cut back on manual processes.

Jassy also suggested AI will help shift employee focus toward work that involves more problem-solving and strategic thinking. Not all employees have welcomed the message, with some concerned that changes are happening without clear plans for retraining or job transition.

At the same time, some Amazon staff have been told they’ll need to relocate. According to Bloomberg, corporate employees are being asked to move closer to their managers and teams, often close to central offices in cities like Seattle and Washington DC. The report said many workers would have to move to stay in their current roles.

Microsoft is going through its own round of cuts. People familiar with the matter said the company is planning to eliminate thousands of jobs, mostly in sales. The move is expected to be announced in early July, after the end of its fiscal year.

The company hasn’t confirmed the exact number of cuts or any details of timing. However, sources said the layoffs may affect more than just sales and could be adjusted before the official announcement. Microsoft has not responded to requests for comment.

The cuts would come just a couple of months after Microsoft laid off 6,000 workers in May, a round of job losses that hit product and engineering teams, and spared most customer-facing roles such as marketing and sales. But those areas may not be safe from future cuts.

In April, Microsoft told employees that some sales duties – especially those involving small and mid-size clients – would be handled by external vendors. The shift suggests the company is looking to reduce direct headcount but maintain business operations as usual.

Microsoft had around 228,000 employees as of June 2024, including about 45,000 in sales and marketing. The company often makes staffing and structural changes around the end of its fiscal year in June, which matches the timing of the latest planned cuts.

While jobs are being lost, spending is going up. Both Amazon and Microsoft are investing heavily in AI infrastructure, with Microsoft set to spend US$80 billion this year, most of it going into data centre expansion in support of AI-related services. Amazon’s capital expenditure will be even higher – about US$105 billion – mostly allocated to its AWS cloud business.

Amazon has consistently outspent its peers in AI infrastructure, and 2025 is on track to continue the trend. It’s putting money into hardware, software, and data facilities that support AI tools used internally and by cloud customers.

Microsoft’s spending push is also focused on meeting rising demand for AI tools. As more businesses look to add generative AI to their products, Microsoft has had to scale up its infrastructure to avoid performance bottlenecks.

The investments come at a time when layoffs tied to AI adoption are becoming more common in the tech sector. According to career redevelopment company Challenger, Gray & Christmas, roughly 20,000 job cuts in the first five months of 2025 were attributed to “technological updates,” a category that includes AI.

Last year, a report from Goldman Sachs estimated that generative AI could eventually automate up to 25% of jobs in some industries. That number wasn’t limited to tech – roles in marketing, administration, and customer service are among those seen as at risk.

At Microsoft, AI is already shaping how teams are staffed and how work gets done. The company has repeatedly said it’s committed to being a major player in AI, and recent changes in how it sells to customers reflect that shift.

Amazon, meanwhile, is trying to position itself as an AI-first company, using the technology to run elements of its operations and cut costs. In the short term, that means more automation – and fewer people doing repetitive tasks.

Both companies are making changes and not talking about what support is available for affected employees nor how they plan to retrain people whose roles are being replaced.