WFH and profits of IT firms

The Covid pandemic has undoubtedly changed the world permanently in many ways. More visibly, people have increasingly started to work from home, even though common wisdom requires workplaces to make employees productive. Besides, informal `water cooler chats’ as a break from work, conversation with colleagues to improve morale and infinite meetings conducted throughout the day, keep employees challenged to deliver.

While work from home protocols were inevitable, IT services companies have declared spectacular December 2020 quarter (Q3 FY21) results compared to the same period a year ago. The HCL Technologies reported a 31.1% YoY rise in net profit for the December quarter, for Infosys it was a 23.7% rise while Wipro reported a 20.8% growth, MindTree a 65.7% rise even as Larsen & Toubro Infotech reported a 37.85% jump compared to the year-ago period.

Delving a little deeper into the Statement of Consolidated Audited Results of the IT companies, even considering a nine-month period, roughly corresponding to the spread of the pandemic when employees were forced to work from home, substantial savings in employee-related costs appear behind the impressive increase in company profits.

The IT companies, with coronavirus impacting the continuity of operations, ensured health and safety, business continuity, customer support and communications during the global pandemic, deservedly got undivided attention. Companies continued operations even while imposing restrictions on travel and suspending internal events and gatherings even as customers were contacted to secure remote working approval and prepared to receive projects with remote protocols.

Understandably, some customers needed to be reassured that despite working from home, compliance requirements would not be diluted. Collaborative platforms like Microsoft Teams ensured minimal roadblocks to quality delivery while video and chats facilitated collaborative support to customers. Company staffers too were encouraged to follow their usual daily routines, remaining as active as possible online, connecting with teammates.

While customer satisfaction was ensured and projects were delivered effectively, substantial and immediate savings on travel costs were made. Employees had to perforce stay put in their base and Zoom meetings became the norm. Entertainment, canteen, transportation costs due to cabs and buses ferrying employees to and from homes, were tapered off as there was no need for companies to spend on these accounting heads. Vacant campuses do not need 24 hour air-conditioning and lighting, and this resulted in substantial savings on power costs. All these factors reflected on outstanding December quarter (Q3 FY 21) statements.

The productivity of employees working from home is undoubtedly higher. The employee works much beyond the statutory 10 am to 6 pm timing, with the Zoom platform ensuring crisp regulated meetings in comparison to the several never-ending meetings of yore.

The daily commute to and from the office invariably caused employee fatigue resulting in time wasted in bumper-to-bumper traffic with near-zero output. Recent newspaper reports have confirmed petrol consumption has tapered off, public transport revenues have fallen and metro ridership declined, all pointers to less people on the road, leading to less congestion and cleaner cities with declining pollution levels.

Smaller campuses

On a longer-term, employees observing the work from home protocol will result in the need for smaller campuses with lesser infrastructure and buildings that will not need to be depreciated over time. Depreciation costs would not figure as expensed items in the profit and loss statement, resulting in even more profits for the company.

Equally importantly, more and more women will be coming into the workforce. While earlier women did go out to earn cash, with falling poverty levels a woman staying at home had become the new status symbol. It is, however, difficult to remove societal reasons behind low female participation running deep in the workforce.

Work from home is a sure shot opportunity to change this culture. Zoom and Google meetings and other teleconferencing facilities mean that women are now on par with men and can work from home minus lack of safety. Without leaving their homes now and with slashed commuting times, it is feasible for women to do both office and family chores through an efficient networking apparatus from home. Women employees are talented and sincere and an asset to every workplace, and the diversity they bring to the table will only increase the benefits of demographic dividend.

It is nobody’s case that a pure work from the home environment will have zero impact on customer deliverables and be the way forward. A combination of work from home with one or two days spent physically in the office is necessary to enhance profit trends of Q3 FY 21 of IT companies.

The old order has changed, there is now a new normal and it is for the IT firms to quickly adapt to the new reality. As the December quarter results have shown, resultant financial results are indeed welcome.

(The writer is a former Executive Director and Member, Board of Directors, BEML)