The lockdown period has had many corportaes rethinking their age old operating model. The work-from-home norm has made many realise the redundancy of the surplus real estate, when they can exploit the advantages of technology. Not only will this help reduce a mojor chunk of overhead costs, that could easily tune up to millions, but also helps emplyees save on their commute time.Â
In its forecasted plans for the next 5 years, TCS aims to roll-out a operational strategy that will see a vast majority of 75% of its 4.48 lakh employees globally (including 3.5 lakh in India) to work from home. The average in the industry today is only 20%. The new model called 25/25 will require far less office space than occupied today. “We don’t believe that we need more than 25% of our workforce at our facilities in order to be 100% productive,” says TCS’s chief operating officer NG Subramaniam.Â
He further adds that each employee should spend only 25% of working time in office. This will also imply that of all the team members, only 75% of a project team may be in a single location and the rest will be dispersed across geographies, he says.
With such a stark reduction in the employee head count, does this also mean that the demand for office real estate would also drop proportionately? For firms the cost benefit will be huge but may not be directly proportional, says Ashutosh Limaye, Senior Director and Head, Strategic Advisory & Valuations, Anarock Consulting. The percentage reduction in workforce will not be equally proportionate to the decrease in office space. So, 25% less employees in office may reduce the need for office space by 15%. The reason is shared spaces in terms of common areas or facilities might not reduce as much.
Given that, TCS is currently leading amongst all the other Indian IT service companies, it wouldn’t a surprise if and when the rest follow suite. This woud bring about a complete transformation in the operating models of the IT firms, which are presently have the highest CRE absorption rates in the country. While IT services companies in India have the best HR practices in line with clients of the developed work, flexibility isn’t one of them. They never really did offer work from home options to employees due to security requirement of customer projects (especially in sectors like defense, public sector, BFSI), unless of course anyone has a personal situation to be taken care of. IT product firms and MNCs such as IBM, Cisco, Microsoft have more work flexibility options for employees.
With the industru echoing in on this move, Infosys CEO Salil Parekh and Wipro CEO Abidali Neemuchwalaalso made headlines with the announcement of similar strategies.
However, we are yet to wait and see how the aftermanth of the pandemic unfolds. Research in the past has indicated that work-from-home results in a major dip productivity, after a prolonged period of time. It also stated rise in cases of depression amongst the workforce. As recent as 2017, companies such as Yahoo, Bank of America, Aetna, IBM reduced or completely eliminated their telecommuting programs. Accounting the volitality of the various factors involved, the Indian Corporate industry is yet to see the outcome of its plans.