Office realty set to shrink as work from home becomes reality
Deloitte, PwC, KPMG, EY, Accenture and Cognizant are analysing their real estate strategy to look at ways to substantially reduce rental costs.
Work from home (WFH) may have a big negative impact on India’s commercial real estate, with perhaps half-a-million sq ft of office space getting vacated. This will likely be a big blow to a sector that had seen substantial investment activity in pre-pandemic months. Some of India’s top professional services firms and companies in information technology (IT) space are considering surrendering a part of their rented office space as they look to implement work from home for their employees even post lockdown.
Deloitte, PwC, KPMG, EY, Accenture and Cognizant are analysing their real estate strategy to look at ways to substantially reduce rental costs.These companies say that even when they open up post lockdown, about 25-50% of their executives will continue to work from home, directly impacting their need for office space.
The big four consultants and other professional services companies like BDO and Mazars may let go of half a million sq ft of office space by June end, say real estate industry executives. This will be over and above postponing negotiations for more office space.
‘Ensuring Safety of Employees’
Cognizant recently transported some 70,000 desktops to its staff working from home and may be now looking to give up the commercial space occupied by these employees, said people in the know. The company did not respond to ET’s query.
Mid-sized NBFC Clix Capital which has nearly 600 employees — is planning to vacate half of its office space. “At least 50% of our staff will permanently work from home, that will help us giving up about 40,000 sq ft of space,” said Pramod Bhasin, founder, Clix Capital. “In the longer run we also need to relook at branches and its sizes, if customers prefer more digital and doorstep banking approach.”
Unmesh Pawar, partner and head, people performance and culture, KPMG India said: “We believe that the current situation with the ‘six feet office’ and physical distancing will push most organisations that can allow people to work from home to do so, to the extent possible, in order to ensure their safety and continuity of work.”
FLEXIBLE WORK DAYS
Among large banks Axis Bank is working on a plan to implement regular work-from-home guidelines for 2-3 days of the week. “We are looking at 2-3 day flexible work-from-home model for 30% of our corporate office staff, we have experimented with this and are fairly confident that this will work,” said Rajesh Dahiya, executive director, Axis Bank.
Dahiya added that while the initial idea of flexible work hours was not aimed at reducing office space, the mid- and long-term space requirements may go down as the bank looks towards hot seating models. RBL Bank too has asked its admin team to pilot WFH models which could help it eventually give up one large office space.
“Many organisations are expected to reduce investments in real estate and invest more on enabling technology,” said Padmaja Alaganandan, chief people officer, PwC India. “Our future real estate needs will be based on the results of evaluation but decision has not been taken as yet,” a Deloitte India spokesperson said. Accenture did not respond to ET’s questionnaire.
“We will let go of at least 10-20% of our office space by end of June as conserving cash is crucial. We are currently analysing which buildings and offices can be let go off, as we occupy office space also for forensic labs or other crucial functions,” said a senior partner with one of the big four firms.
May 16, 2020