On Monday, Amazon CEO Andy Jassy published a statement announcing the end of remote work at the company. In it, he also asked employees to work in the offices five days a week, something that has stirred up strong reactions among its employees worldwide.
Former Amazon Web Services (AWS) employee John McBride recently used his X account to share his theory on the true motivations behind the company’s return to a total face-to-face work model. A day before, Fortune published messages that employees had posted on an internal Slack channel, where they seemed to agree with certain points of this theory.
Amazon’s Return-to-Office Policy
In his statement, Jassy announced that starting in January 2025, Amazon will enforce a stricter return-to-office policy, requiring employees to work from the company’s offices five days a week. There will be exceptions, but working remotely will be rare for its workforce. Jassy stated that this shift to on-site work would strengthen the company’s diminishing leadership culture.
Simultaneously, Amazon’s CEO also announced a reduction in the number of middle management positions within the company to decrease internal bureaucracy and streamline decision-making. Although he didn’t explain how this reduction would be carried out (through layoffs, internal role changes, etc.), many suspect that it’ll involve layoffs and a freeze on new hires.
Steps to End Remote Work at Amazon
According to McBride, the company’s decision to shift back to a 100% on-site work model wasn’t actually related to company culture or the goal of streamlining internal operations. Instead, it was primarily driven by tax and economic considerations.
The former employee alleges that Amazon’s plan to end remote work involves five phases.
- Phase 1: Amazon’s initial phase of the plan involved significant layoffs of a portion of its large workforce following the pandemic. This phase led to around 27,000 job cuts across various divisions of the Amazon conglomerate.
- Phase 2: Starting in 2023, the second phase involved implementing a two- or three-day-per-week return-to-office policy. This policy required employees to go to the offices closest to their homes. However, many Amazon employees resigned because they refused to return to the office.
- Phase 3: According to McBride, Amazon has initiated phase 3 following the announcement of the 100% on-site work model. The company no longer asked employees to return to the offices closest to their homes but instead specified that they must go to the location where their team is based. During phase 2, McBride went into the Denver office near him, a 20-minute commute. However, with the new measure taking effect in January 2025, the office for his team would be in Seattle, which is 1,400 miles away. “This is when I personally left in 2023 because I wouldn’t relocate to Seattle,” he said.
McBride believes that phase 3 will exhaust many employees who are unwilling to move or cover long distances weekly, just like he was. He predicts that many of his former colleagues will follow his lead and quit their jobs. In fact, this viewpoint is widely shared by employees who have posted on the Slack channel, which Business Insider has had access to.
- Phase 4: The former Amazon employee claims that during phase 4, there will be what he calls the “silent sacking.” This will involve pressuring middle managers and employees with remote offices, causing them to lose influence in the company’s decisions and ultimately lead them to resign due to isolation. Amazon has already carried out this practice in certain development areas, according to developer Justin Garrison.
- Phase 5: McBride says that phase 5 signals the end of remote work. Every employee will be required to work from the office assigned to their team, regardless of where they live. Those who haven’t relocated near their assigned office may no longer be able to work for the company.
Similar to employees from other companies like Dell, Amazon staffers have raised concerns on places like Reddit and other social media platforms, alleging “covert layoffs.” This term refers to a situation where employees are essentially forced to resign, allowing the company to save on compensation.
Savings on Layoffs and Tax Exemptions
Up to this point, you could consider McBride’s theories more or less “credible.” In any case, they suggest that the downsizing strategy aims to transition to a 100% face-to-face model. This would bring Amazon employees back to costly offices that have been underutilized since 2020.
According to a study by the consulting firm Gartner, companies are paying a high price for their policies of insisting on a return to the office: This stance has caused 62% of their employees to consider leaving. Similarly, a survey by software company BambooHR revealed that 18% of HR managers expected an increase in voluntary resignations from their employees after initiating return-to-office programs, but things didn’t go as planned.
Notably, Xataka On can’t confirm McBride’s claims that Amazon’s move also aims to reduce operating expenses for the AWS workforce. We've reached out to Amazon for comment on the matter and will update this article if we hear back.
He states that AWS’s profit margins have decreased after companies that use AWS services have had to cut costs. Business Insider reported in August that this has led Amazon to suspend certain services.
The CIO PlayBook 2024: It’s all about Smarter AI report, published in June, highlighted that enterprise investments in AI are projected to increase by 61% in 2024 compared to 2023. Therefore, there’s no indication that the leading cloud computing services provider will experience a significant drop-off that would justify a company-wide HR strategy.
McBride also argues that Amazon’s return-to-office policy would result in substantial tax breaks for the company. However, other X users have correctly pointed out in the comments to his post that governments offer tax incentives for job creation and maintenance, regardless of whether employees work in an office or remotely, rather than for significant layoffs.
Additionally, the former employee claims that with the return to the office, the local economy surrounding the offices will be reactivated, something that has brought tax benefits for the company in the past. In this regard, the local authorities where Amazon’s offices are located have applauded the measure announced by Jarry.
Jon Scholes, president of the Downtown Seattle Association, expressed his satisfaction to the local news portal Komonews. “Amazon employees and other employees that work in offices are customers for lots of small businesses, and that’s job creation, tax revenue for those small businesses and the city of Seattle,” he said. However, it needs to be clarified that the increase in attendance doesn’t, by itself, bring any direct benefits or perks to the company.
Image | Steve Jurvetson
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