Amazon announced they are enforcing a more strict Return-to-Office (RTO) policy with mandatory 5 days a week in office. They join a growing number of tech companies who are ditching the flexible work from anywhere arrangements popular during the COVID era in favor of more face-to-face time in hub workplaces.

In this post we'll explore what the new Amazon RTO policy is, why they say they're implementing it, and discuss whether that makes sense or not - pulling from opinions from the industry and a former AWS employee.

Amazon's new Return-to-Office Policy

Amazon CEO Andy Jassy released a memo detailing sweeping changes to their working policy. The highlights are:

• Return-to-Office 5 days a week
• Increase ratio of Individual Contributors : Managers by 15% by 2025.Q1

Why Amazon changed their RTO Policy

Amazon says the reason they're making these changes is:

• Increase speed and ownership -> IC:Manager ratio change
• Increase invention, collaboration, and culture -> RTO 5 days a week

They say their experience with 3 day RTO for the past year has given them confidence that more days in office is better for the company.

Is this really why Amazon is moving to RTO?

I've written extensively about why most company's claims about RTO improving collaboration, culture, and productivity are false. Whether that's intentionally false or simply misguided is still up in the air and an exercise I'll leave to you to come to a conclusion on.

Former AWS Employee John McBride wrote an interesting thread giving his take on why Amazon is moving to RTO - and it has nothing to do with culture or collaboration.

His take is:

• Layoffs in 2022/2023 were largely about economics
• Many tech companies increased their headcount by 2-3x in 2020-2022 but later realized they'd overreached - revenue wasn't keeping up with costs
• So they instituted mass layoffs to right-size themselves
• They also utilized RTO as a way to force employees into voluntarily resigning - reducing their ongoing costs while saving them layoff money and taking a smaller PR hit
• These reduced ongoing costs led to better earnings reports and thus led to some of the soaring stock prices we've seen in the past few years

So this round of RTO enforcement is largely following the same play book. Moreover it looks good for the massive tax breaks they get for having offices in different cities.

Some more tidbits I found interesting from the ensuing discussion:

• Tax implications may be even higher when you consider Section 174 which limits tech employee salary amortization to a 5 year period. This means each employee has a longer tail of costs so cutting them sooner rather than later may have long-term benefits.
• Amazon is eligible to receive huge tax breaks for their brick and mortar offices so the incentive is large - $773 million from Virginia and $3 billion from New York
• AWS's margins are pretty high - reported to be around 40%. So even with the recent trend of moving from public cloud to self-hosted, it seems unlikely that AWS's margins / earnings are the driving force behind this. Instead it may be more macro effects with Amazon's overall margins closer to 3-9% over the period of 2022-2024.
• On one hand these RTO policies may drive away more senior employees who have more options and value flexibility. On the other hand many of these RTO policies are selective - not applying to high performers - so this may have a limited impact on their senior workforce.

Next

We don't know for sure why Amazon is moving to RTO 5 days a week but I think a lot of these hypotheses provide interesting context and food for thought. What is clear is that this RTO trend is widespread and the popular claims around collaboration and productivity don't seem to hold water.

Something is driving this - we're just not sure what.

If you liked this post you might also like:

• How Return to Office Policies Kill Productivity for Software Engineers - and How to Salvage It
• Why Zig is Migrating from AWS to Self-Hosted
• How to Find Fulfilling Work as a Software Engineer and Achieve more Impact with Less Stress