The Operational Excellence Tools Series | #25: When Amazon Cuts 27,000 Jobs to Improve Productivity

An OPEX Perspective on the Efficiency Revolution

Welcome to the unique weekend article for the Loyal Fan subscribers-only edition.

This is the #25 article of The Operational Excellence Tools Series.

Outlines and Key Takeaways

Part 1 – Official Announcement

Part 2 – Background and Meaning

Part 3 – Analysis Through the Lens of Operational Excellence

Part 4 – Lessons for Businesses

Part 5 – Conclusion

Part 1: Announcement – When Amazon Restructures for Performance, Not Crisis

Over the past two years, Amazon — the world’s largest e-commerce and technology conglomerate — has undergone a series of large-scale organizational restructurings aimed at improving operational efficiency.

From 2023 to 2025, the company has eliminated more than 27,000 positions across AWS (Amazon Web Services), Prime Video, Twitch, Human Resources (HR), and Retail Operations.

These changes were not driven by crisis, but rather by a deliberate shift in strategy — what CEO Andy Jassy described as “rebalancing our structure for the long run.”

1. The Context: When Growth Slows, Efficiency Becomes Central

After unprecedented expansion during the pandemic, Amazon’s global workforce swelled to over 1.5 million employees.

However, beginning in 2023, the company’s revenue growth slowed significantly.

According to Amazon’s Q2 2025 Financial Report, revenue increased by roughly 8% year-over-year, while operating costs rose more than 11%, tightening profit margins.

With rising labor costs and fierce competition in e-commerce and cloud computing, Amazon now faces the challenge of restoring “efficiency at scale.”

Unlike earlier layoffs that mainly affected warehouse and logistics roles, recent restructuring efforts have targeted corporate, technical, and middle-management positions — areas once considered insulated from such cuts.

This shift signals a new reality: Amazon is not merely reducing costs, but rather reducing organizational complexity, a hallmark of the Operational Excellence (OPEX) mindset.

2. A New Direction: From Scaling Up to System Optimization

Since 2024, Amazon has launched several internal initiatives aimed at Operational Simplification — streamlining processes and hierarchies at every level of the organization.

Examples include:

• AWS merging overlapping product teams to shorten decision cycles.

• Prime Video integrating its content and advertising divisions to better leverage audience data.

• HR consolidating recruiting teams that had overexpanded between 2020 and 2022.

In employee meetings, Andy Jassy emphasized the goal of “moving faster with fewer layers.”

He explained that in a massive organization, success depends less on headcount and more on how smoothly the flow of work moves through the system.

Efficiency, not expansion, has become the new competitive edge.

3. Market Reaction: Wall Street Applauds Operational Discipline

The market responded positively to Amazon’s new direction.

Following the release of the company’s Q2 2025 report — showing improved profit margins and reduced labor costs — Amazon’s stock rose over 6% in August, reaching its highest level since 2021.

Investors interpreted the results as a sign that Amazon is shifting from “growth at all costs” to “growth through discipline.”

Brian Nowak, an analyst at Morgan Stanley, commented:

“Amazon is becoming a model for global tech giants — knowing when to pause, restructure, and regain sustainable speed.”

This sentiment reflects Wall Street’s broader expectation that efficiency, not expansion, will define the next decade of corporate performance.

4. Internal Reactions: Uncertainty and Opportunity

Despite market optimism, reactions within Amazon have been mixed.

Employees have expressed concern on internal forums such as Blind, describing the restructuring as “disorienting” — particularly for teams that were merged or reassigned without clear direction.

Others, however, view it as a long-overdue opportunity to focus on meaningful, value-driven work within a Lean organizational culture emphasizing transparency, measurement, and continuous improvement.

An AWS engineer told GeekWire (2024):

“We’re learning to work with fewer layers and more autonomy. It’s challenging at first, but the efficiency gains are becoming visible after a few months.”

This statement captures Amazon’s shift from bureaucratic management toward empowered, data-driven teams — a model that aligns closely with Lean and OPEX principles.

5. The Industry Landscape: From Layoffs to Structural Reinvention

Amazon’s transformation is part of a broader realignment across the technology sector.

Since early 2024, virtually every Big Tech company has restructured to optimize performance:

• Google cut over 10,000 positions to refocus on AI and data infrastructure.

• Meta consolidated product and marketing teams, removing redundant management layers.

• Microsoft reduced around 7,000 roles in customer support while accelerating process automation.

These shifts highlight a shared trend: efficiency and simplification are becoming the new standard for post-growth-era organizations.

Large enterprises are moving from expansion to streamlining, from more people to the right people.

Viewed through the OPEX lens, Amazon’s restructuring is not just about headcount.

It represents a fundamental redesign of operations — reducing duplication, eliminating waste, and clarifying decision-making channels.

This embodies the OPEX principle often summarized as “Lean before Layoff” — optimize before you downsize.

In a Lean system, inefficiencies and unnecessary roles reveal themselves naturally, making workforce reductions a result, not a goal.

6. When “Cutting Jobs” Is No Longer the End Goal

Ultimately, Amazon’s ongoing transformation underscores an important distinction:

The company is not cutting because of crisis — it is restructuring for performance.

The difference lies in its management philosophy.

Instead of “reducing people to reduce costs,” Amazon is reducing complexity to increase speed.

This shift captures the essence of modern Operational Excellence:

It’s not about doing more with fewer people, but about doing the right things — faster, smarter, and with greater clarity.