India's IT and ITES sector spearheading the work from home (WFH) model are set to usher in a radical restructuring of business models that will transform everything from collapsing management hierarchies, expenses on commercial real estate to hiring of top talent.
Around 90% of IT employees and 70-80% of Business Process Outsourcing (BPO) firms as well as small and medium business firms including e-commerce have moved to work from home and that is unlikely to change much even after the lockdown is lifted. Amid fears that the covid pandemic may persist and social distancing likely to stay, the paradigm being set by the sector could well be the new norm for most industries.
HR experts say that while WFH will boost productivity it will also mean lower salaries.“In every role across most organizations, the remuneration will go down by 15-20% with the variable component increasing," says Pankaj Raj, founder and CEO of Search Value, an executive search firm, specialising in top management hiring and consulting.
“The next 4 quarters is about survival, saving cost under all circumstances, lesser reward for the same work, virtualization and breakdown of traditional hierarchies," sums up Raj based on his interactions with client CEOs.
The evolution of WFH will end employment as we know, tweeted Rajesh Sawhney, co-founder of cloud kitchen platform InnerChef and an angel investor. He like many experts feel that work is going to get decentralized, compensation will be rethought and restructured and new ways of rewards and recognition will be devised to motivate the workforce.
“Investors will back startups that can scale up and down quickly," adds Sawhney. He says that companies will start thinking about paying for work done as opposed to fixed monthly payments in the covid era. New tools to measure productivity and enhance collaboration will have to be built and this will be a good opportunity for startups, he added.
Experts concur that there is bound to be a flattening of hierarchies as data enables transparency and visibility into productivity. “There is a deep structural change across all geographies, some newer innovations will come but technology will tend to disintermediate the layers," says Sawhney. He fears that in India it is the GM-VP level, the layer who is in the mid 30-40s age group that may be seen as redundant and not adding value.
An HR head for a professional services companies catering to the IT sector said on condition of anonymity that employees are being divided into batches with a similar mix of skill sets. These batches will only come to office in turns and not for the entire month, so there will be only 20-25% in office while the rest will WFH, though this can wary by the organization type, role and the overall need to be present in the office premises.
"If your role is not critical and doesn’t require you to be in office, you can well expect to WFH for remainder of 2020," says Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research.
Companies like TCS have already announced that even after normalcy, only 75 % of their 4.5 lakh workforce will permanently work from home or anywhere else. TCS plans to move to this work model and put the required processes and systems in place over next two years. “This will release a huge amount being spent on office space, rent, operating, administration and transport costs," said Gogia.
With more chunks of people WFH, traditional office spaces that are expensive may not be required. A CHRO who declined to be named said that many companies have put their expansion plans on hold. Floor plans too are in the process of getting revised, as companies look to sub-rent small floors.
“What is certain is that commercial space requirements are in for a major upheaval, as India Inc will not hit a ‘business as usual’ equation for quite a long time. Tenants will recalibrate their space requirements, and the effective average monthly per-desk rentals at Grade A office spaces in some of the major business cities will be a central consideration,"said Ashutosh Limaye, director and head-consulting, ANAROCK Property Consultants.