How COVID-19 may make glitzy tech hubs obsolete within five years
Before the COVID-19 pandemic, spending billions of dollars to build gleaming, pride-inducing, trendsetting corporate headquarters buildings was all the rage for some of the biggest high-tech companies. Now, with social distancing requirements, employees working from home, and a myriad of other coronavirus effects hanging over workers, those big corporate tech hub headquarters and campuses could become fond memories.
The reason, said Ian Campbell, the CEO of technology analyst firm Nucleus Research, is that the pandemic makes it indisputable that tech workers can do their jobs from any location, which redefines those huge headquarters buildings as expensive and ego-boosting overkill.
"They'll be primarily more empty than full five years from now," said Campbell, who started his technology analyst company 20 years ago in Boston. Whether analyzing Microsoft, Salesforce, or other large IT companies, the insights gathered about workforces, central office locations, and the effects of the coronavirus provide plenty of fresh fodder for viewing future office space needs in new ways, he said.
"Most of those Microsoft buildings will be empty, they don't need them," he said of the company's campus in Redmond, WA, which is in the middle of a multiyear renovation costing some $1 billion or more. "Some people will never come into the office again at all after the pandemic."
SEE: The new normal: What work will look like post-pandemic (TechRepublic Premium)
That will likely be the case for people with customer service jobs, which can be done from home. Other workers, including those who do need to interact with clients or other company workers, will find that new arrangements will be made for them as well, including the need to only come into offices on an occasional basis, said Campbell.
"That is the future of work" after the COVID-19 pandemic, he said.
Campbell said his views are synthesized from his two decades of working with technology vendors, managing his company, and watching how technology affects the business world.
Five years from now, offices won't be central to getting work done anymore and this was proved by the last three months of the pandemic, he said. What companies learned from their recent COVID-19-induced experiences was that real work can be done from home and that the needed technologies are there to make it happen, he said.
Since the pandemic started forcing business closures and regional quarantines in the US in mid-March, large tech companies including Google, Facebook, and Zillow told their workers in May that they can work from home into 2021. Twitter went even further, telling its employees that they never have to return to their offices and can do their jobs remotely forever if that's their preference.
The future impacts of such decisions on Silicon Valley, New York City, and other traditional tech hub regions are being closely watched, said Campbell. What this could bring, he said, are changes to companies and regions that previously had a tough time attracting the best talent. Those companies can now hire workers who can do their jobs from home anywhere, without the need for glitzy headquarters buildings in expensive cities.
"This gets to the future of office space," said Campbell. "A company that used to rent multiple floors in a high-rise building in Boston will now only require one-quarter of that space. It will come down to team dynamics. Employees will cycle in and out of the office based on different teams. The future of a company will not be one office, but will be multiple small offices where people can get together as needed."
This is all particularly glaring because some of the biggest tech companies have been spending a lot of money over the last few years to enlarge and improve their corporate headquarters buildings and campuses.
Apple is spending about $5 billion on its campus upgrades in Cupertino, while Microsoft is spending multiple billions on its campus renovations. Salesforce spent $1.1 billion on its Salesforce Tower in San Francisco. With all this money invested, it's hard to imagine them walking away from these buildings.
But reality may be the final arbitrator in these situations, said Campbell.
Recreating the energy of the office is needed
Just after the pandemic happened, Campbell told the 15 analysts and staffers who work for Nucleus Research that they could work from anywhere indefinitely, as the company's Boston office was shut down due to the virus. Campbell moved to Miami to work from the sunbelt and get away from Boston during the pandemic, signing a year's lease and urging his employees to work from wherever they would be happy. But tweaks will be needed, though, as businesses now must look for ways to encourage and duplicate the valuable in-office work and team mojo they had together when they worked in their offices, said Campbell. Without shared offices, those "sparks" of working together and innovating, sharing, and brainstorming are much harder to capture, he said. To solve those problems, occasional small meetings in much-smaller offices or offsite gatherings may be the sign of the future, with social distancing protocols and other precautions in place, said Campbell. Many work conversations can be done online or on the telephone, but the immediacy of face-to-face meetings will always be important. "That is not as likely to happen in the work-from-home environment," he said.
Companies are not just buildings and products or services, and employees need to be around managers and each other so they can be trained and educated in the DNA of their company, said Campbell. In the world of COVID-19, that will be harder and adjustments will need to be made, he said. SEE: Guide to Becoming a Digital Transformation Champion (TechRepublic Premium)
"We're now in a situation today where we don't need offices, but we do have a situation where we do need corporate DNA and the ability to impart that on employees," he said. "Maintaining that company DNA is going to become extremely difficult when you can't get people together to interact. Plus, an office adds perceptions about a company for customers and employees."
Still, the corporate DNA can be provided during about 20% of an employee's workweek, while the remaining 80% of their time can be spent on self-directed work, he said. "That 20% is that needed spark. That means 80% to 90% of employees can work remotely as long as we bring them back to an office for that 10% to 20%. That's the framework I'm using going forward."
The analyst team at Nucleus Research also shares a daily call together each morning, talking about work, life, and everything in between. "Even if we only tell jokes and complain about things that are happening in our lives, we have the call," said Campbell. "I purposely keep our calls very interactive, very unstructured. It's like a conversation of people sitting around or standing around the coffee machine in the office."
For businesses, the timing of the COVID-19 pandemic is fortunate, at least in terms of technology, he said. "If COVID-19 happened 10 years ago, the needed technologies would not have been in place for remote workers," from the cloud to reliable VoIP, cloud-based applications, and more. "If it was going to happen this way with the pandemic, we got lucky. Without these tools today, it would be terrifying."