Amazon’s retail business is locking down its hiring budget.
According to an internal email, this major part of the company will keep a “flat headcount opex,” or operating expenses, this year compared to 2024. Headcount operating expense refers to employee salaries plus their stock-based compensation, the email noted.
The update was shared earlier this year by a finance leader in Amazon’s retail unit. This executive explained that any increase in the hiring budget will be “scrutinized” and require “strong supporting reasons.” Business Insider obtained copy of the email.
The retail business is also shifting from managing “opex targets versus headcount targets,” according to the email. That likely means managers now have a strict predefined budget allocated to their teams, instead of specific headcount targets when hiring.
These changes only apply to corporate employees in Amazon’s retail business. They do not apply to staff working in Amazon warehouses and in the company’s cloud division, Amazon Web Services.
The retail organization includes everything from Amazon’s online marketplace to its logistics arm and Fresh grocery business.
In an email to BI, Amazon spokesperson Zoe Hoffman said this is the “responsible way” to grow a company of its size, and stressed that not growing the hiring budget in a given year is not the same as not hiring. Amazon continues to hire across the company, she added.
“Each of Amazon’s many businesses has its own approach to hiring based on its individual needs,” Hoffman added in a statement. “However, across the company, we’ve historically considered both the number of people we need to hire and the associated costs — that is, Operating Expenses or OpEx — of those hiring decisions.”
The move underscores CEO Andy Jassy’s relentless push for increased efficiency and higher profit margins.
Since taking over in 2021, he’s slashed jobs, revamped pay, trimmed management layers, and even reconsidered Amazon’s product listing approach, all in the name of saving money and driving efficiency. Amazon reported record profit of $59 billion in 2024, nearly double its 2023 result.
Holding the hiring budget steady could encourage Amazon retail managers to get smarter and more flexible with compensation expenses. HR professionals say budget-based planning offers tighter financial control than headcount targets. That can be useful in uncertain business environments.
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Staying within limits
The email said Amazon retail CEO Doug Herrington inspected operating expenses “very closely throughout the last two years.” The retail organization also recently launched new financial reporting and analysis tools for tracking headcount and operating expenses. Some of the new features include the ability to plan headcount mix by job level, technical skills, and tenure, according to the email.
Amazon has been on a yearslong cost-cutting spree. After booming during the pandemic, the online retail and cloud giant’s growth slowed, triggering cutbacks in warehouse growth and the closure of some experimental ventures.
Headcount has also leveled off. The company doubled its workforce to 1.6 million from 2019 to 2021, but that number dipped to 1.55 million last year. Amazon has cut at least 27,000 employees since late 2022.
Managing headcount instead of a hiring budget lets managers bring on high-cost talent without worrying much about salary, David Kryscynski, a human resources professor at Rutgers, told BI. But with a fixed labor budget, he said, managers are more likely to stay within financial limits, either by hiring less or opting for lower-cost candidates.
This model also gives managers more staffing flexibility, said Shaun Pichler, a management professor at California State University, Fullerton. Without headcount targets, they can bring on cheaper contractors or temporary workers. And they’re not pressured to spend the full budget, often resulting in leaner teams.
“Tech firms have more widely adopted OpEx targets post-pandemic for largely the same reasons — high labor costs, reduced revenues, and to give managers more flexibility,” Pichler said.
Amazon’s retail arm remains laser-focused on cutting costs. At an internal all-hands meeting earlier this year, retail chief Doug Herrington told employees that belt-tightening would likely extend into 2025, even as the company pours money into major investments elsewhere, BI previously reported.
“We have to keep reducing costs so that we can afford the big investments in big new businesses,” Herrington said.
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