At the beginning of the global pandemic last year, companies began announcing plans for employees to Work From Home (WFH) The list of companies announcing permanent or long-term work-from-home plans continued to grow over the months. Some announced long-term plans and a few allowed employees to permanently work remotely by shutting offices.
Shutting offices and getting out of lease was seen as a strategic move to cut costs. A few months ago, consulting firm Deloitte made news when it announced plans to shut Southampton, Nottingham, Liverpool and Gatwick offices in UK and transfer all staff to permanent work from home. Now we have some hard data from tech giant, Google that is saving over $1 Billion a year by getting employees to Work From Home. According to a recent SEC filing by the company,
As a result of COVID-19, our global workforce continued to operate primarily in a work from home environment for the quarter ended March 31, 2021. While we continue to evolve our work model in response to the uneven effects of the ongoing pandemic around the world, we believe that our internal controls over financial reporting continue to be effective. We have continued to re-evaluate and refine our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely.
Bloomberg, that analyzed the filing data said “During the first quarter, Google parent Alphabet Inc. saved $268 million in expenses from company promotions, travel and entertainment, compared to same period a year earlier, “primarily as a result of COVID-19” The article added
On an annualized basis, that would be more than $1 billion. Indeed, Alphabet said in its annual report earlier this year that advertising and promotional expenses dropped by $1.4 billion in 2020 as the company reduced spending, paused or rescheduled campaigns, and changed some events to digital-only formats due to the pandemic. Travel and entertainment expenses fell by $371 million.
Going by this analysis, it is likely that CFOs and CxOs at other large organizations are going to take a hard look at the cost-benefits of long term Work From Home (WFH) and plans for Return to Office (RTO).