IT sector’s return to office will be gradual, not 100% in 2021

Contrary to the analysts’ predictions, almost no one among the large and very large companies mentioned plans for any hub-spoke model in the medium term.
disinfectant in office

Hyderabad, Jan 1 : Information technology companies’ return to office in 2021 will be gradual with no perceptible change by end of March.

Return to Office (RTO) will peak towards the end of 2021 and will never be 100 per cent, revealed a survey by Hyderabad Software Enterprises Association (HYSEA), the apex body of IT and ITeS companies in Hyderabad.

60 per cent of the companies plan to have less than 20 per cent of their workforce operating from office by end of March 2021. But there will be significant increase of 40 per cent in Work from Office (WFO) numbers by end of June.

Nearly 75 per cent of large and very large companies are planning only 0-9 per cent employees working from office by end of March. By June 2021, WFO percentage is likely to touch 20 and in quite a few cases, WFO is expected to touch 30 per cent. By December 2021, the likely WFO percentage for large and very large companies is 50-70.

More than 55 per cent of the Industry plans to increase WFO percentages to greater than 70 per cent by Dec 2021, with more than 39 per cent planning to increase to greater than 90 per cent WFO. No one responded saying 100 per cent WFO will return, said HYSEA, a registered apex body with more than 300 members representing the IT/ITES industry in Hyderabad.

As many large companies have reported that a significant percentage of their employees are working from outside Hyderabad (native places), RTO will become that much more time-consuming and complex considering the reverse migration that needs to happen in large numbers, survey report said.

More than 50 per cent of the companies have reported more than 25 per cent of their Hyderabad based workforce operating from outside Hyderabad, while 25 per cent of the companies have more than 50 per cent of their workforce operating from outside the city. More than 50 per cent of large and very large companies have reported that 25 per cent or more of their employees are working from outside Hyderabad. In some cases, it is more than 50 per cent of employees. It is tough to predict when (and if) such a massive workforce will return to Hyderabad, said HYSEA.

While Covid cases in Hyderabad seem to decline, it noted that there is a talk of a potential second wave from authentic medical sources and there is also uncertainty regarding the vaccine availability and percolation.

“On the other hand, life on the roads, in malls, in tourist places and other areas seems to have nearly come back to normal going by the intense people movement and economic activity. In a way, as HYSEA predicted, we have now learnt to co-exist with the virus. But the WFH percentages for IT/ITeS industry continue to remain as predicted at around 90 per cent. In case of many large companies, it remains as high as 95 per cent.”

Productivity continues to be very high, despite many large companies reporting that work environment at home is the single largest factor impacting Work From Home (WFH). Most large companies have managed the employee well-being and inclusivity well with very few observations here and there. This shows the resilience of the industry, it added.

More than 63 per cent of companies report a productivity levels greater than 90 per cent relative to the pre-pandemic levels. In case of large and very large companies, nearly 100 per cent responded saying that the productivity levels are greater than 90 per cent and in some cases 100 per cent.

The survey revealed that there are very few cases of stress and inclusivity issues were observed during the prolonged WFH. Many companies handled the situation well with proactive measures.

Contrary to the analysts’ predictions, almost no one among the large and very large companies mentioned plans for any hub-spoke model in the medium term.

Some very large companies have said client imperatives will drive them to increase WFO in 2021. Most of the other companies said vaccine availability and increased confidence in managing incidents at workplace will be the reasons. These are mainly Global In-house Centres (GICs).

The participating companies were defined micro (0-100 employees), small (101-500 employees), medium (501-1,000 employees), large (1,001-5,000) and very large (more than 5,000 employees)

Nearly 29 per cent of Large and Very Large (LVL) companies have said that return to office, when implemented, will be mandatory. As expected, many in line with global policies, have said it will be voluntary.

The respondents include all sectors of the IT Industry, including IT Services, IT Products and IT enabled Services.

Compared to the previous survey, the WFO percentage has clearly increased. But it is interesting to note that nearly 75 per cent of large and very large companies have reported WFO per cent as 0-5 per cent.

In the last nine months, only 20 per cent of the LVL companies have terminated some office space in the last few months. Majority have held on to status quo.

Majority of the companies have not anticipated any increased office space requirement post RTO. A small percentage anticipated 10-20 per cent increase. The perception that double the current space is required in future is not getting justified by the data.

The IT/ITES industry in Hyderabad has over 5.82 lakh employees working in 1,500 companies. The sector had clocked exports of over Rs 1.28 lakh crore during 2019-20.

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