The real cost of hybrid working – Indigo 21


The real cost of hybrid working

The real cost of hybrid working

A macbook laptop on a wooden desk with full coffee cup, notebook and mobile phone

August 5, 2023

Hybrid working has changed the dynamic of offices and workplaces around the world. Employees splitting their working days between their office space and working from home (WFH) has helped countless numbers of people to improve their work-life balance. WFH also gives employees the opportunity to gain a flexible working pattern that suits them and their families.

But the costs of hybrid working are often passed on to the employer, as it’s down to the organisation to ensure its employees have everything they need to WFH as effectively as they do from the office.

The benefits of hybrid working are easy to consider, but what is the real cost to the employees? It’s not just their desk they’re missing out on by working from home. It’s one-on-one conversations with their colleagues, workstations with appropriate equipment and more.

What is the cost of hybrid working?

A poll by Gallup found that the biggest challenges of hybrid work for employees are:

  • Having less access to work resources and equipment
  • Feeling less connected to their organisation’s culture
  • Decreased team collaboration
  • Impaired working relationships with coworkers
  • Reduced cross-functional communication and collaboration
  • Disrupted processes
  • More difficulty coordinating work schedules, tasks and timelines

The costs of hybrid working in terms of actual budget fall on the employer, who has a duty to help create permanent workstations in employees homes to make up for the desk that sits empty in the office. And all this empty office space is making headlines around the world. In the USA, there is now more empty office space in 2023 than there was during the 2008 recession.

The real estate implications of long-term WFH culture are huge. A report published by the McKinsey Global Institute stated that the number of employees working in the office has stabilised at 30% below what was normal pre-pandemic. The paper that covered hybrid work in cities around the world says:

“Office attendance varies by city; for example, it tends to be lower in cities with expensive housing and a large share of knowledge-economy workers. It also varies by industry and workers’ demographic characteristics. There are several reasons to think that office attendance has stabilized and will continue at current rates.”

A knowledge-economy is described as an economy that depends on human capital and intangible assets, such as technology. The IT industry is a great example of a knowledge economy, and the BPO industry is an industry that sits within a knowledge economy.

How Manila is leading the way

Despite almost being a knowledge-economy in itself due to the number of people employed in IT, there is one country bucking the WFH trend: the Philippines. The global centre of the BPO industry, leased office space in Manila recently reached 738,400 square metres — a 62% increase on the figures from 2022.

That’s not to say that some companies and organisations in the Philippines have completely stopped hybrid work. Last year, the IBPAP found that almost 70% of the country’s IT-BPM companies, which contains all of the BPO industry, were considering keeping their hybrid work set-ups into the future. However, according to Coldwell Banker Richard Ellis (CBRE), the IT-BPM sector accounted for 54% of all real estate transactions in the Philippines during 2022, proving that offices in the Philippines are busy, full and thriving.

For more information about the future of work, the BPO industry and more, make sure you’re following the Indigo 21 blog for more insights.


McKinsey Global Institute paper — McKinsey’s Real Estate Practice Empty spaces

and hybrid places | The pandemic’s lasting impact on real estate | July 2023

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