Article: Future of work & economics of workspaces

Life @ Work

Future of work & economics of workspaces

Even before the current crisis, letter ‘I’ dominated tech abbreviations viz. IoTs, IIoTs, AI, Industry 4.0 were already disrupting jobs and the skills.
Future of work & economics of workspaces

The COVID-19 pandemic provides a glimpse into a future world, one in which digital has become central to every interaction, forcing governments, corporates and individuals to further up the technology adoption curve almost overnight.  Technology is set to be at the heart of every entity as we enter into a new era post the coronavirus-induced lockdown. A new way of life is the harbinger for future strategy.

Even before the current crisis, letter ‘I’ dominated tech abbreviations viz. IoTs, IIoTs, AI, Industry 4.0 were already disrupting jobs and the skills. In 2017, the McKinsey Global Institute estimated that as many as 375 million workers—or 14 percent of the global workforce—would have to switch occupations or acquire new skills by 2030. The current challenge is pushing all stakeholders to embrace digitalization & automation in an unprecedented way.  Today government & corporates alike are looking not only to make workplaces more secure but also to deliver services to their customers differently.

The government is ramping up efforts to deliver services digitally. Whether it is financial inclusion by leveraging trinity of Jan-Dhan, Aadhaar, and Mobile (JAM) or its decision to allow the farmers/FPOs to directly sell their produce over electronic marketing platform eNAM, bypassing the mandi, to promote social distancing and provide fair & remunerative prices to farmers, delivering services digitally has always been fast, reliable, convenient and of late it got one more adjective “socially distanced” mode of settlement, a win-win narrative for both the transacting parties.

Future of Work:  Work from Anywhere

Work from home (WFH) is now a cliché, a new form of remote working ‘Work from Anywhere’ (WFA) is fast catching up. Working from anywhere is a concept where employees can live and work wherever they choose, predominantly within a specific country, and in some cases anywhere in the world with reliable internet connectivity.

A 2017 study of “Valuing Alternative Work Arrangements” jointly carried by Princeton & Harvard University found that employees value the option to work remotely and the average worker was willing to accept 8% less pay for the option to work from home.  This indicates that workers assign a monetary value to the flexibility provided by a WFH policy. And with a Work-from-Anywhere (WFA) policy, employers add even more value to employees by granting geographic flexibility. It can significantly boost employee well-being.

Multinational technology giants pioneered the culture of WFH. This concept augurs well with the service sector predominantly IT/ITES, Accounting & Finance, Capital Markets, Consulting, Healthcare, Education, Customer Service, Marketing, Human Resource, Program/Project Management, etc. where employees can be equally productive while working remotely. Almost all the Corporates located in pandemic affected nations temporarily resorted to WFH, however, there would be a great deal of economics involved if they decide to shift this trend permanently. Companies can save a lot of revenue on office space occupancy and can optimize running office expenses such as electricity, air conditioning, security, regular maintenance cost, pantry cost, thus substantially reducing the cost of infrastructure per employee. It creates another avenue for effective cost-cutting.

Similarly, WFA policy could have a profound impact on the overall macro economy. Employees with the option of WFA will be willing to relocate to their home town in Tier II / III cities/towns or cities with a lower cost of living. A comparative analysis in the cost of living index suggests that Tier 1 cities are 15% to 35% more expensive as compared to Tier II/III cities. Even with the better-negotiated salaries, there will be an effective increase in real salary for these employees. Increased net salary will boost demand consequently fuel the growth engines in Tier II/III cities. On the other side, WFA policy has the potential to decongest crammed Tier I cities especially metros. It will also help in moderating skyrocketing rents & housing prices, lessen traffic jams thus enhancing overall living conditions.

However, it is easier said than done. WFH/WFA comes with its own set of challenges. First, not all the staff in any of the job role can work remotely. Organizations have to frame methods to identify & segregate job roles/profiles which can work remotely and which cannot. Also, all the staff in remote working profiles may not be best suited for WFH/WFA like newer employees with little experience, especially recent college grads, low performers, disengaged staff might fall into this category. Whereas strong performers, highly engaged staff, self-driven employees, independent job profiles holders will be the natural choice for remote working.

Second, organizations have to deploy tools for digitizing their system & processes, tools for productivity measurement for evaluating dispersed and distributed workforce. Third, one of the critical issues to be addressed by companies shifting to a WFH/WFA is risk mitigation by strengthening cybersecurity. Last but not the least, the biggest challenge of HR would be to engage employees working remotely as collaboration, spontaneity, coffee table conversations won’t be available on a scheduled call.

Industry Matters: In manufacturing units including heavy Industries, MSMEs & Retail outlets one has to mandatorily come to the shop floor to be productive. The manufacturing sector is a major part of the Indian economy. It accounts for nearly 16% of its GDP. This sector becomes even more important when our aspiration is to make it as a quarter of our GDP by 2025. Even during the pre-COVID era, the manufacturing industry was not in great shape, especially the auto industry where sales were down by more than 15% and production cuts of the order of 5 to 10%. This industry now has been hit badly in many ways due to the Corona effect. Lockdown has substantially reduced the scale of operations and production volumes and uncertainties in logistics have disrupted supply chains. Post-COVID era would be more challenging with sporadic shutdowns and acute workforce shortages due to rare reverse migration. The automobile, textile and engineering industries, among others, depend primarily on outstation employees for working in plants. Even if workers manage to move back to their original workplaces, they may not be welcomed by their landlords due to fear of psychosis. Many of the migrant workers can’t be replaced by locals overnight because of the skills they’ve picked up over the years doing specific jobs.

Industries with deep pockets will see a renewed impetus for Smart Factories which will bank more on the mesh of intelligent networking of machines and processes with the help of automation and data exchange.

Assuming pandemic to continue for a fairly long time, many industries are now tweaking their workplaces by embracing digital tools like offsetting fingerprints sensors with face recognition for attendance, factories are using wrist bands that alert workers if they get too close to each other. Inside these devices are tiny sensors that can capture data in real-time and transmit them to other devices. All these examples are evidence of the fact that technology & digitalization will be the linchpin for a new way of working.

In toto, for the short term, manufacturing units could see a spike in their overall cost and reduced margins. Those units which have been operating with excellent operational parameters, like, high quality, high productivity, well-trained workmen, well-maintained machines, etc., will take-off faster than the others.

Today amid the fear and uncertainty, inaction is riskier than action. Bold experiments and new ways of working is the new normal. It is also opportune time for the companies to double down on their learning budgets and commit to up-skilling & reskilling their staff. Developing this muscle will strengthen companies for future disruptions.

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Topics: Life @ Work, #GuestArticle, #COVID-19

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