DIGITAL WORKPLACE – WHEN ALL ROADS LEAD TO ROME…

Digital transformation is a journey that every firm will have to undertake in its own way with multiple connected intermediary goals, striving, in the end, towards ubiquitous optimisation across processes… and the business ecosystem of a hyper-connected age between people, teams, technologies, various players in ecosystems, etc., is the key to success.

Before talking about the alternatives, we are sure everyone reading this article is aware that a Traditional Office was the basic or primary way that an office existed. A professional wanting to start a business or practice would first look for an ‘Office Place’.

The ‘Office’ had its own advantages and limitations but it was the only way we used to work. Many employees complained about having to get to the office daily, or getting half a day’s wages cut for punching in five minutes late and spending so much critical time travelling to the office. A study by MoveInSync1 found that Indians spend 7% of their day getting to their offices. However, with the outbreak of the pandemic, everything has changed, starting from the perception of individuals to realistic circumstances. Since travelling has not been permitted for the major portions of the years 2020 and 2021, businesses have been left with no option but to switch to digitalisation and to a digital office. In India we call this ‘jugaad’. But the ‘jugaad’ worked! Almost everyone adjusted to the new normal and somehow survived the toughest of times. After the two ‘waves’ that have come and gone and the threat of a third wave looming large, some of the businesses have already restarted and switched back to the traditional office concept. People are taking precautions to the extent possible and are resigned to their fate, but feeling that they do not have any other option, offices are resuming normal work.

There are three big limitations of physical or traditional offices:

1. Cost of real estate – Rent, lease, etc.: With the constant rise in the price of real estate and limited supply, the rent in the P&L account is always a significant amount for Indian companies. And some of the well-established businesses which have saved on rent by purchasing office space are now realising that their significant capital is stuck in real estate which is not growing at the same rate as their business. So it is not always wise to invest limited capital in real estate and block it for a long time when as a businessman you can put it to work harder. We have spoken to various professionals from India and received information that the total cost of real estate investment / rent could be between 20 and 40% of the total revenue a firm can generate.

2. Commuting for employees: As stated earlier, in India people spend nearly two hours to reach the office and if that is not already bad, the situation of overcrowded public transport, bad infrastructure and roads, and unrealistic traffic wastes a lot of valuable time of employees in travelling. More often than not, employees going out for a crucial meeting will prefer to leave an hour early instead of risking getting late. However, this leaving early may be good for creating an impression, but the time that it costs can be huge for the overall business. On an average an Indian spent as much as 9% of his time in commuting2 in the pre-lockdown era. Now, due to the lockdown, this cost is only going to be higher.

3. Limitation in hiring: The traditional office works within the four walls of the premise, so many times a company from Chennai or Delhi cannot hire talent from Mumbai or Bangalore unless the employee is willing to relocate; in many cases, companies have to spend extra on relocation expenses, etc.

There are arguments that the above limitations have always existed and these, coupled with other limitations, were always part of the game; companies had come to accept the limitations and functioned without much ado.

So what has changed now? It’s the pandemic which is working either like a blessing in disguise or a ‘rude awakening’ for businesses. Traditional offices may not suddenly go out of fashion, but a shift towards digitalisation which started gradually has taken a huge leap of faith and the pandemic has allowed everyone to adopt the trial and error method as they were assessing the limitations that their businesses were facing due to the ‘Work From Home’ culture. However, while many were struggling during this period, some started thriving and excelled in this new culture. The businesses that understood how technology worked and the best way to utilise the alternatives are now setting the standards for others to follow.

While the traditional offices may not go out of fashion completely, businesses are finding different ways to mix and match them with the new alternatives available to maximise the work culture vis a vis the cost. There are many different types of offices that are being set up currently. Let us look at some examples:

Shared Offices:
XYZ Associates, a CA firm, has 50 employees. Most of them are on audit and mostly never visit the office. XYZ Ltd. had purchased a large office space earlier. Now, realising that it does not need such a big sitting capacity and that it has already spent so much on infrastructure that it is not feasible to change office, it has decided to share its office spaces in a strategic manner so that the total cost is divided. This used to be the practice earlier, especially with brokers at the BSE or at other places where the cost was too high; but now many professionals have started utilising extra space in their offices with clear demarcations and sub-let it to other businesses to improve the return on the capital invested in their bigger office. If need be, in future they may stop sharing the office space.

Honestly, the shared office concept was there even prior to the pandemic but it was very limited and mostly seen as a way to save on rent; but the way shared offices were used was more in the manner of a traditional office where, after sharing the space, the business will occupy its own space and operate just as a traditional office. Now, with technology the concept of shared offices is evolving where businesses are realising that their need for office space may not be constant and, accordingly, the ‘shared office space’ concept has made a comeback where the same old concept is used in a modern way. But the principle is the same.

Work From Home:
Since the onset of the pandemic, XYZ Associates has been left with only one option – Work From Home. It facilitates employees with all necessary hardware and software (readers may refer to our previous article). The work is done, the client is satisfied and the lockdown rules are also not violated. What else do we need?

One of the most used expressions of 2020 has to be ‘Work From Home’ (WFH). Almost all offices have shifted to this culture. People enjoyed working from home till it lasted as the new dressing sense arrived, attending meetings via mobile phone and computer started saving a lot of time and they started getting more time to spend with family; these have helped many people, but after a point of time many got tired as it was merely a makeshift arrangement. However, some companies do prepare well and have utilised the opportunity diligently to ensure that they shift part of their workforce to WFH at a reduced pay; with the kind of savings employees manage on cost of travelling to having to buy or rent a house in a premium location to avoid travelling, many employees have willingly accepted the offer as it has offered a net advantage to them. WFH, if established well in an organisation with a proper digital workplace with impeccable communications, regular flow of information and processes, can help iron out a lot of limitations in businesses.

Flexi Offices:
XYZ Associates earlier had an office with a seating capacity of 100. During the pandemic it realised that a traditional office is a must for multiple purposes (having a registered address for compliances, holding client meetings and important team meets), but everyone need not visit it daily. The cost of such an office is also too high. So it decided to shift to a smaller space with 30 seats and flexi timings. Now the employees can plan and ‘book’ the office for meetings or visits. This has indeed solved many problems for the firm.

This is a new concept in offices that has been growing in recent years. Offices will have the capacity for a limited number of employees and while it will be used as an office, not everyone would be accommodated at the same time. So while most of the employees can continue to work from home, the ‘Flexi Office’ system permits some of the employees to travel to the office in a predetermined way (by appointment!). It can be used for important meetings or discussions which cannot be done via the online mode or when employees are not able to work from home owing to temporary limitations. Organisations will use different methods to regulate who can travel to office, from making an early ‘booking’ to rotating the staff on fixed days to allow them to access the office. In this system, the organisation does not have fixed desks or places for employees – instead, a desk space / seating area is shared and generally allocated on a FIFO basis. The concept of a ‘Flexi Office’ gives the optimum benefits of the traditional office and also an option for organisations to take advantage of technology to save costs as well as hire talent without geographical limitations.

Co-working Spaces:
Mr. A stays on the outskirts of Mumbai and has a downtown office. In an ideal situation, he would love to work from home to save on travel time and cost. But he has various limitations at home: a small home which may not be ideal for attending calls, it would be difficult to ignore guests that may visit during office hours, as also multiple people working from the same home. Mr. A can’t work from home, but also wants to save on travel time and cost.

On the other hand, the firm XYZ Associates where he works wants to save on office infrastructure cost but is not comfortable with employees working from home. They have seen employees’ family members disturbing them during WFH calls or have experienced wi-fi connections getting lost.

Both XYZ Associates and Mr. A agree to opt for Co-working spaces. They find such a space in an area nearest to the employee which offers a desk, electricity, infrastructure and unlimited high speed wi-fi. This will solve everyone’s problem. While Mr. X will take only ten minutes and spend Rs. 20 daily to travel to such a Co-working space, XYZ Associates will save on office infrastructure. Also, when the company offers Co-working to employees in locations like Bandra-Kurla Complex or Nariman Point in Mumbai, it may cost them as much as Rs. 30,000 to Rs. 50,000 per seat but on the outskirts it may go down to Rs. 5,000 to Rs. 10,000 annually.

Co-working spaces are growing in popularity in India and companies like Innov8, WeWork, Springboard, etc. are already investing big time to provide Co-working spaces. Co-working is basically like a shared office but instead of an organisation deciding rules and managing costs, it is managed by a team of professionals who share their space for a fee. For example, just as we pay rent to a hotel to avail all facilities, Co-working is a ‘hotel’ for our business where we can focus just on work and all the formalities from cleaning the space, arranging for coffee, to collecting your courier, etc., is taken care of by the service provider. Plus, Co-working provides no distraction working along with a virtually office-like experience for employees who are working from home. Many Startups that are offering WFH have also started offering incentives to employees if they prefer to work from any of the Co-working spaces near by. And especially in cities like Mumbai where the houses are small and it’s not possible for all employees to manage working from home without distractions, businesses are benefiting from this new option. Co-working charges a minimum monthly or daily fee and lets individuals work without worrying about the other basic necessities like Internet access or arranging for administrative responsibilities.

One can use Co-working spaces by booking a desk for a single day, a week or a month.

Virtual Office (only for registration):
XYZ Limited started its business asking all employees to work from home. Now, since their turnover has crossed the minimum limit for GST registration they are in trouble as to how to do it without an official place of business. So they have been looking for Virtual Offices that charge a minimum amount and let them rent the office only for documentation purposes. XYZ Limited will now have a registered place of business while the employees can still continue working from home.

Virtual Office as a concept is growing in popularity in India owing to regulatory requirements wherein we still need a physical office address to start a business. A Virtual Office is basically a service in which a business owner can show a place as its address for communication and compliance purposes at minimal cost. This becomes useful in cases where a person wants to work from home but does not have all the documents for office premises, or does not want to show the residential address for business correspondence.

CONCLUSION
Growth is optional, but change is constant. There are many examples in the past when companies which have moved along with the shift in technology have gained significant ground vs. the companies that resisted change. The giants of the retail business have fallen because they did not adapt to eCommerce, while newbies of the market like Flipkart and Zomato are becoming far more valuable as they have shown adaptability.

Through this article we are not saying that traditional offices will be out of fashion immediately but now the time has come when, as things have started moving, the one who is ready to adapt to change will thrive. The Digital Workplace is the future and the only thing that is still not clear is the extent to which it will change our lives. Like the computer revolution of the 1980s or mobile phones earlier in this century, every one of us knew it would be a game-changer but ‘how’ was not clear back then. Similarly, the Digital Workplace is going to be the modern way of working and we can either resist the change and delay it, or accept it with open arms and get ready for the future.