Tech companies are leading the way to a permanent shift to working from home

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The novel coronavirus pandemic is leading some of the world’s biggest and most influential tech companies to make a permanent shift to remote work, and businesses in other sectors increasingly say they are considering the same.

Facebook Inc. and Ottawa e-commerce company Shopify Inc. both said on Thursday that significant numbers of employees could continue working from home after the pandemic subsides. The Silicon Valley social-network company expects that half of its nearly 50,000 employees will be working remotely by 2030, while Shopify said most of its 5,000-plus staff would continue to do their jobs from home while it also adjusts its workflow and office-space needs.

They follow in the footsteps of other North American companies, including San Francisco’s Twitter Inc., whose vice-president of people, Jennifer Christie, said last week that the decision for employees to return to the office “will be theirs.” Enterprise-software maker Open Text Corp. of Waterloo, Ont., announced last month that it would close half its global offices because of the success of remote work and its need to restructure.

With vast numbers of the world’s office workers doing their jobs remotely, businesses are rethinking their commercial real estate budgets and work culture. Tech companies are leading the way, although other sectors are beginning to grapple with a future in which people might not want to be in close quarters – and where real estate costs could be trimmed.

“If the past is any guide, the tech sector has typically been at the leading edge of new workplace trends, such as open-concept designs, and other sectors have typically followed their cue,” real estate economist Carl Gomez said. “That said, there are always going to be limits for some industries to adopt it fully, especially if their business ultimately requires some form of physical interaction between staff or clients.”

Financial services and banks might soon follow technology’s lead, with some executives considering options that would allow work-from-home flexibility and space people out in their offices. “That densification is going to have to unwind, in the short term anyway, and maybe permanently,” Dave McKay, Royal Bank of Canada’s chief executive officer, told The Globe and Mail earlier this month.

Christian Sewing, CEO of German financial-services giant Deutsche Bank AG, said at his company’s annual general meeting on Wednesday that he was considering reducing offices in expensive urban cores.

“If 60 per cent of employees worldwide can work away from their offices and still deliver excellent service to our clients, then of course we have to ask ourselves, can we give our staff additional flexibility to work from home if they want to?" Mr. Sewing said.

In a tweet on Thursday, Shopify CEO Tobi Lutke said that the company would keep its offices closed until 2021 as it reconfigured its operations to be a “digital by default” organization. “Office centricity is over,” he wrote.

The e-commerce company has jockeyed with Royal Bank of Canada in recent weeks for the title of Canada’s most valuable company. It says it will not immediately alter its square footage across Canada, although it occupies or has agreed to lease floor space in downtown developments in major cities and will determine over the coming months what it will need for employees.

Shopify is one of the biggest tenants in downtown Ottawa, where it is headquartered, and it has plans to be a flagship tenant in a massive downtown Toronto development called the Well. In January, the company revealed plans to hire 1,000 people spread over four floors of Vancouver’s Bentall Centre office tower. It also has offices in Montreal and Waterloo, Ont.

Shopify said in a statement on Thursday that it would retain offices across the country as “recruitment hubs,” but would not expect most employees to regularly show up in person. This will allow the company to hire people no matter where they live, the statement said, while redesigning its office spaces to allow those people to come in and collaborate when necessary.

“We’re looking at a model that doesn’t require people to come in, but allows people to come in at the right moments,” Brittany Forsyth, Shopify’s chief talent officer, said in an interview.

She said it is not a sign that Shopify is reducing its presence in Canada. “If anything, we’re going to be more aggressive about our hiring and growing,” Ms. Forsyth said. “How that manifests in a physical location – that’s one of the things I don’t have the answer for yet.”

The novel coronavirus pandemic has pushed many businesses onto the internet after years of holding out. With online stores as its key offering, Shopify has benefited immensely from this, pushing its market capitalization to $128-billion.

“A common misconception about company culture is that if you have a good one, you have to hold on to it,” Mr. Lutke said. “I believe this to be wrong. If you want to have a great culture, the trick is to evolve it forward with your environment. Take the best things with you from version to version.”

Facebook said on Thursday that it had no plans to close any offices as it allows employees to work remotely. Its vice-president of human resources, Lori Goler, said in a statement that “offices will continue to play an important role in the future of work,” but that its shift to more remote work “is about supplementing offices, not replacing them.”

The California social-media company’s CEO, Mark Zuckerberg, added that “there are still a lot of open questions about how this will work,” and that the company would adjust and improve its program.

In recent years, tech companies’ demand for office space has helped push vacancy rates to record lows in Toronto and Vancouver. With big tech shying away from offices, that could lead to more vacancies and give tenants the upper hand in lease negotiations. “We are definitely shifting," Mr. Gomez said.

“For tech companies, like Shopify, like Twitter, they realize that productivity has not ebbed. There is a reality where they are comfortable keeping people at home.”

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