Nearly 90% of IT employees miss office environment: Knight Frank survey
Real estate operating expenditure constitutes around 4.3% of the operating income of IT companies, leaves little scope for cost saving from Work From Home, reports Knight Frank
Knight Frank India, a leading international property consultancy, released its latest report which cited the impact of work from home on the corporate real estate in India from two dimensions – employee insight and 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%), Bengaluru (91%), Chennai (90%), Pune (88%) and Hyderabad with 81%. The COVID-19 enforced WFH has also adversely impacted the productivity and performance of the employees. About 30% of employees have expressed deterioration in their productivity and work performance while working from home.
According to the report, in terms of real estate operating expense (real estate opex), the Indian IT industry spends around 4.3% of its operating income annually on real estate costs. Smaller IT companies spend their 4.7% on real estate, followed by large IT companies at 4.4% and mid-sized IT companies at 3.6%. Overall, office space rent paid by IT companies constitutes 0.5% to 2% and the remaining is the cost incurred towards operating these facilities.
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 segments 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. 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.
Sugata Sarkar, senior director - Consultancy & Market Research, Knight Frank India said: “This unique market research of the real users of IT/ITeS office spaces clearly indicates that despite certain conveniences sited for work from home arrangement, most employees miss office environment due to the benefits of communication and collaboration. For any IT/ITeS services company, new work arrangements should bring in significantly greater efficiencies for it to be considered successful. However, as the survey clearly shows, end-users have not seen any remarkable increase in efficiency. At best, it has remained the same as before. Without significant improvement, the real value of work from home arrangement may not be impactful on a long-term basis.”