According to a study conducted by Knight Frank India, an international property consultancy, shares the COVID-19 enforced WFH has also adversely impacted the productivity and performance of the employees. About 30 percent of employees have expressed deterioration in their productivity and work performance while working from home.
The report cites the impact of the work from home on the corporate real estate in India from two dimensions – I) Employee Insight and II) Cost structure.
According to the ‘Work From Home (WFH) and the impact on Corporate Real Estate’ report by Knight Frank India, nearly 90% of survey respondents miss their office environment while working from home. In the share of employees who miss their workplace, NCR (98%) leads the table followed by Mumbai (94%), Bangalore (91%), Chennai (90%), Pune (88%) and Hyderabad with 81%.
Considering the significance of 4.1 million IT sector employees and their influence in decision making, Knight Frank India conducted a survey with 1600 employees of Information Technology (IT) & Information Technology enabled Services (ITeS) companies in India to understand their proclivity towards Work From Home. The Survey cited that 60% of respondents believed time saved due to no office travel, and 58% highlighted savings due to no cost of travel, as advantages for WFH. Whereas, in terms of disadvantages, 43% felt a lack of office driven social life and 42% cited difficulty to focus in an informal setting.
The Information Technology sector has been the key driver of India’s office market. It contributed 44% of cumulative office space demand in the last 10 years (2010-2019). Hence, the report dwells into a deeper understanding of the saving yields from WFH from the prism of the cost structure of the IT firms. The study was based on financial statements of the 119 listed IT companies representing 37% of the industry operating income, and 28% of the employee base.
As per the analysis, with consideration for an assumed 50% of employees working from home, net cost savings yielded for IT firms stood at around 1%. This is after adjusting for additional cost borne by IT companies for setting up the home infrastructure. Further, there is not much variation in saving across large, mid or small segment of companies. While business continuity planning (BCP) stands as a reasonable argument in favour of a Work From Home model, cost-saving as a parameter does not support this ideology. It is to note, in the case of large IT companies with owned premises and campus developments, the cost-saving will be even lesser compared to companies operating from leased premises.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “With the imposition of the lockdown in March this year, it was imperative to enforce Work From Home, to which people adapted remarkably quickly. As the spread of COVID – 19 continues and numbers still surge in India, many people still prefer to work from home, making the arrangement still relevant. However, as normality returns and the economy opens, it would be anyone’s guess to see what percentage of workforce continues to work from home. Going forward, we feel that the choice work from home versus work of office will be decided by many other factors and not cost savings alone. While the savings on real estate operations expenses are marginal, this saving has to be measured against qualitative aspects of the business such as lack of control, retention and attraction of talent, competitive edge, data security etc.”