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The jury is still out on the future of office real estate. A hybrid working model doesn’t sound very encouraging for office developers.
The jury is still out on the future of office real estate. A hybrid working model doesn’t sound very encouraging for office developers.

India Inc gears up to go back to office

  • Companies are slowly and tentatively shifting from WFH to WFO. What are the plans and pain points?
  • There’s apprehension about using public transport. Refurbishing office ventilation systems is a challenge. Whether offices would go back to 100% strength is an open question

NEW DELHI : Paul Dupuis wore a blue suit, his lucky tie, brown shoes, a black mask and a cycling helmet before he hopped onto a vintage Indian bicycle. The managing director and CEO of staffing firm Randstad India, who lives and works in Bengaluru, was riding to office after 300 days.

“Never has purpose been more important than right here, right now," he wrote on business networking site LinkedIn, posting three pictures of him on the cycle.

Randstad India is testing the waters; testing the new world of work, one where there would be far fewer people on the office floor than what used to be the norm in pre-pandemic months. For its test run early in February, Randstad asked the company’s senior leaders to report to work. An app will manage the company’s workflow. Employees wanting to be in the office have to seek permission and reserve a desk through the app; a QR code that gets generated has to be scanned at the point of entry.

“We wanted to test the technology and the logistics. It went well. Leaders came back to the office after over 300 days. It was quite a moment," Dupuis told Mint.

Randstad India has been conservative in reopening offices, unlike, say, manufacturing companies that got employees back to offices in June 2020. Those who rushed to open early were often hit hard. As employees contracted covid-19, it led to more business disruptions. A second wave of office openings followed in September-October. As we near the end of the fiscal year, more corporates, particularly those in services, are grappling with transition again—the journey back to near-empty offices.

Despite nascent signs of a second wave in some parts of the country, the pandemic appears to be under control in most Indian cities. Meanwhile, senior employees in many companies have been reporting fatigue over the work from home arrangement, which is compelling organisations to re-think their cautious stance.

Yourdost, an emotional wellness company, analysed data from 1,000 Indian professionals in December 2020 to understand how they feel about returning back to offices. About 49% of India’s working professionals were bored of work from home; 41% said they would prefer working from the office but only 19% were willing to return immediately; nearly half of the professionals polled who were in leadership positions preferred the office.

“People are saying they have work from home fatigue. They face social alienation. So, we are going in for rotational shifts," said Shuchi Nijhawan, senior vice president, global human resources and new verticals at Eka Software Solutions, a Bengaluru-based commodity management software company. “We will begin with 30% attendance in the month of April and go up to about 50% in September if all things are okay," she added.

There is a reason why those in leadership positions want to get back to the office. For decades, Indian managers have thrived on micromanagement. They like to surround themselves with people and exert more physical control over what they do. In some cases, companies don’t have the systems and processes yet to access the performance of managers when they work remotely.

Younger professionals, meanwhile, appear happier working from home. They seem anxious about getting exposed to the virus. There is fear about passing it on to family members. There is also apprehension about using public transportation. Services companies that employ thousands may be following all the government-laid protocols on sanitisation and social distancing, but they have little control over how people get to work.

“Without vaccines, public transport can increase the number of cases. The pandemic is very much (still) here," Arjun Vaidyanathan, chief operating officer of KPMG in India, warned. Covid-19 cases in Mumbai, for instance, have shot up ever since local trains re-started operations on 1 February. “Alternative modes of transport are expensive for many employees. After vaccination, we will be able to call a higher number of people to the office," Vaidyanathan added.

KPMG has about 10% of its employees reporting to offices across the country today. And like Randstad, KPMG has developed an app for employees to book seats, which will remain in place after the vaccination drive is over. This, by extension, signals the end of the permanent work desk as we know it. Not encouraging news for office real estate developers who lived through a tough 2020—gross absorption in major cities fell by over 40%.

Collaborate and celebrate

Reliance Securities, a financial services company in Mumbai, signed an agreement for a new head office in Goregaon three months before the lockdown. The plan was to host 220 workstations. In the post-pandemic world, the company reorganised the space for 100-120 to avoid crowding. In the middle of the office is a lounge with open spaces. Once in a while, karaoke sessions are organised here.

“We shifted to the new office in October," Meenaa Sharma, chief human resources officer at Reliance Securities, said. “We want to allay fears by organising such events.We want to give a feel that things are coming back to normal," she added.

The new normal, nevertheless, will be about using offices as a space to collaborate, besides celebrations. The pre-pandemic paradigm—where offices were spaces largely for people to report to work—may no longer hold water.

Collaborations, in a physical space, lead to innovation and better outcomes, leaders believe. “The magic happens when you put people in a room together; when they gather around a white board and brainstorm and come up with a solution. It’s a rallying point that builds camaraderie, teamwork and loyalty. We don’t want to lose that," Dupuis of Randstad India said. “When collaboration leads to outcomes and impact, it is time to celebrate," he added.

Most corporations are also planning to adopt a hybrid work policy in the months ahead, where a certain number of people may permanently work from home but attend offices only when absolutely necessary. “Hybrid model will be the new game," said Kaustubh Sonalkar, group director of human capital management, general affairs, and CSR at Welspun Group. “A hybrid model works well for everybody, especially in metros like Mumbai where you spend a lot of time travelling. We are giving people a choice," he said.

Welspun has about 70% of its employees working from home at the moment. By next month, about 40-45% will start reporting to the office. Sonalkar said that the share of the workforce in office will never go beyond 60-65% even after the pandemic is well and truly over.

Lure of the office

Welspun, meanwhile, is working on a rotational system that ensures that all teams don’t land up in the office at the same time. In March, the closing month of the Indian calendar year, accounting and finance teams get busy and need to be in office. “Similarly, during appraisal cycles, the human resources teams will come into the office more regularly. When we launch a new product, marketing teams can meet more often," Sonalkar said.

Software companies sense that developers are doing well with work from home—they are a younger demographic. Senior managers and above are being asked to report to the office. “Management roles are not optional. They have to come back to work. We have seen fatigue at these levels," Shuchi Nijhawan of Eka Software said. “Employees on the product side and development side don’t need to be in office."

Manufacturing companies have less flexibility. In a plant, both white- and blue-collar workers must be present to run the machines, inspect, pick, package and dispatch the products that are made. Those involved in research and development work can’t afford to be at home either.

“Our people who are in R&D are in the office. There are many involved in development and the computing power required to do modelling and simulation is very high. They can’t do it from home," Alok Kirloskar, director at Kirloskar Brothers Ltd and the managing director at SPP Pumps Ltd, said.

Older manufacturing companies, in the meantime, want their senior non-production professionals back at work since they may not have the right key performance indicators (KPIs, or measurable values) to judge those working from home. Junior sales executives, for instance, have weekly targets to meet and can be evaluated easily. Nonetheless, middle managers are expected to bring in value addition, such as nurturing a client or mentoring a team. These are more subjective outcomes and are difficult to access in a work from home situation.

“It gets difficult as you go up the people chain," Kirloskar explained. “The vice president may have to talk to vendors and maintain relationships. I don’t know if he is meeting vendors while working from home."

Kirloskar added that old world manufacturers “carry a lot of people" primarily because the KPIs are not clear enough. “Now, we are forced to build well-graded KPIs so that we understand if these executives are making progress," he said.

Real estate conundrum

On 19 March last year, this writer visited Worldmark, a 1.5-million sq ft commercial development in Aerocity, near Delhi’s Indira Gandhi international airport. India’s lockdown was still a few days away but the landscape—dotted with three corporate towers, 41 cafes, restaurants and bars—already resembled a ghost town. Covid-19 cases were spiralling out of control and the Delhi government had already ordered a closure of dine-in restaurants.

The scenes at Worldmark this year, on 15 February, are a good indicator again. While people are back at the restaurants, corporates have been shy. Atelier, a plug-and-play office suite, still resembles a ghost office. Apart from butlers and a lone Japanese worker in a cabin, almost no one else is around. Bharti Realty, the developers of Worldmark, claimed that currently about 30% of the people are back at the development’s offices; tenants have indicated a higher number will return by the end of March.

The jury is still out on the future of office real estate though. A hybrid working model doesn’t sound very encouraging for office developers. Many companies are in the process of consolidating offices. “Our real estate portfolio has been reviewed and where it can be rationalised, we have either already rationalised or are in the process of rationalising it. We are not adding any more real estate footprint than what we have," Vaidyanathan of KPMG said.

Little surprise then, 2020 turned out to be one of the worst years for Indian office real estate. Gross absorption fell 41% to 34 million sq ft across the top six cities—Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai and Pune—Colliers International, a real estate services firm reported. The company, however, expects leasing activity to pick up by 25-30% in 2021.

Large developers may be doing better than the smaller ones. Anarock Property Consultants, another real estate services company, too remains hopeful of a better 2021 and said that despite work from home, large developers have been able to collect over 95% of their rentals in 2020.

One lingering question remains. Corporate offices are closed spaces with centralized air conditioning currently. In the context of covid-19, most health experts would recommend open windows and better airflow. But that’s nearly impossible in regions like north India, where summer temperatures can shoot up to beyond 40 degree Celsius. What can companies do?

Akshat Bhatt, principal architect at Architecture Discipline, a design studio, said that companies need to start using different filters, such as high-efficiency particulate air (HEPA) filters and other anti-bacterial filters. Installing ultraviolet (UV) filters, for instance, are known to inactivate viruses and bacteria.

“Some firms are doing it… people who are sensible about such things. None of these technologies are new. They have always been around. But people never took it seriously. Now, they are being forced to do so," Bhatt said.

There is a cost implication to such retrofitting, of course. Bharti Realty installed UV filters recently at the Aerocity Worldmark’s common areas. It cost the developer 19 lakh. At Airtel Centre, the telecom service provider’s corporate office in Gurugram, which has 7 lakh sq ft of leasable area, retrofitting UVs cost 1 crore.

But that’s a small price to pay for the health and safety of employees and their families. As the journey back to the office picks up in earnest, more companies will be forced to make such choices.

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