Indian IT firms appear reluctant to provide permanent WFH options. After the pandemic wreaked havoc all over the country and pushed everyone to resort to WFH mode, now as lockdowns are easing, employees are returning to their offices.
Large IT firms are getting their senior employees to operate from offices. This move aims to instill confidence among junior employees who have been working from remote locations since March 2020. Less Covid caseload, the rapid pace of vaccination, and safe working conditions are the major factors driving this return trip.
However, the hybrid operating model seems to be the future than operating offices at total capacity, and there exists a raging debate within the management of Indian IT services firms whether employees should be given a permanent WFH option.
Behind the hesitance of IT firms to provide widespread permanent work from home (WFH) lies a business logic. While captives in India act as cost centers for global corporations, the Indian offices of IT companies operate as profit centers. At present, nearly 1,600 global firms have captive units in India. Captives employ more than 1.3 million people out of the 4.6 million technology workforce in India.
Supaul Chanda, VP at Experis of Manpower Group, said Companies with ODC (Offshore Development Centre) would prefer work from the office because they charge for it. He added, but for captives, work from home will save costs and pointed out, however, the situation is constantly evolving, and there is no finality as to which model will be followed by tech firms going ahead.
Pareekh Jain, Founder of Pareekh Consulting, said, “The firms have already informed employees and staff that they need to come back. It is just a matter of timing. Confidence is slowly coming back because of the increase in vaccination. However, most IT companies are likely to opt for a hybrid working model than opting for a large-scale WFH model,”
Sanjeev Dahiwadkar, CEO of ITShastra, says, “Adoption WFH operating model during Covid-19 pandemic without any operational disruption shows the resilience of Indian IT sector. However, future work models should be hybrid. It will satisfy both the work-life balance needs of IT professionals and the security concerns of clients and. The WFH option has its own set of risks, and Indian IT companies with a large workforce may not be able to maintain productivity over some time,”
Sources state IT services firms are reluctant to provide permanent WFH options, unlike global companies, which are running ‘Global Capability Centres’ or captives in the country. Multinational corporations such as Google, Facebook, Microsoft are providing their employees with an option to work from remote locations permanently. Experts believe that it is easier for captives operated by global corporations to provide permanent WFH options than the IT companies, given their large employee base.
During the first quarter, most large IT services companies witnessed a dip in their margins, owing to an uptick in utility expenses and rising wage costs. If employees return to the office in large numbers during the third quarter of this fiscal, then margin pressure is expected to increase. In that case, justifying the high valuation of IT companies in Indian exchanges will be a difficult one.