I was disappointed to read in a recent column by Gus Carlson in the Globe & Mail https://www.theglobeandmail.com/business/commentary/article-recession-remote-workers-layoffs/ that Apple, Tesla and Goldman Sachs are a few of the many large companies that are using the impending recession to leverage their mobile workers back into the office. These dinosaurs still won’t believe that mobile workers can be more productive working outside the office without their bosses looking over their shoulders. Nor do they consider the considerable benefit to their employees and their families to avoid commuting time and have the flexibility to schedule work and family as equal priorities.
If none of that is important, then consider the economics: it is much less expensive for tech companies to have employees working out of the office, or to hire off-shore employees at a fraction of the cost.
eXp Realty (NASD: EXPI) is an example of a company that got it right from the beginning. In a desparate move, this real estate brokerage company decided to gamble that it could save the company during the meltdown in 2008 by becoming fully-remote. They eliminated all the offices and fixed assets and sent everyone to work from home. By minimizing expenses, eXp was able not only to save their business but indeed began to scale rapidly with no need for external financing. By 2021, the company had expanded to 24 countries with 84,000 agents, generating revenues of $3.8 billion. Even after the 2022 correction, the company was valued at $1.8 billion and importantly, the majority of the equity was still held by the founders. eXp Realty is the subject of a Harvard Business School case study I co-wrote which demonstrates eXp’s superior performance as a fully-remote company. In the current downtuen, many tech companies would be well advised to learn from eXp’s experience in growing a tech company through hard times.
eXp demonstrates that fully-remote companies can scale to enterprise size without constant face-to-face interaction and can outperform their bricks-and-mortar competitors. There are hundreds of fully-remote startups who are scaling with minimal expense and funding. These companies are more resilient and better positioned to succeed during the current tech downturn. They have not had the internecine battles over work style because they have been remote from the outset, like eXp.
Many big companies haven’t noticed or refuse to see the compelling advantages of remote work. They continue to cling to their outdated work models. If they start laying off remote workers to force workers back into the office, then they are losing three times – first by increasing their costs; second, by exacerbating the inefficiencies of office work; and third, demoralizing employees by forcing them back into the office. Instead, these companies should be adopting more remote work models to reduce costs and liberate their remote employees to perform at their best.
The office-first versus remote work style flared up immediately when COVID forced everyone home in March 2020. The progressive companies quickly appreciated the all-round benefits of remote work and incorporated it into their work models and culture. They are stronger for it. The fully-remote start-ups will succeed more often as they are not as dependent on financing which is going to be harder to secure. The office-first companies are still fighting remote work 2 ½ years in. They are ripe for disruption by leaner, more agile competitors working from anywhere.
The current tech downturn will hurt many tech companies large and small. Some will show more resilience than others. Likely the lean, agile fully-remote companies will fare better. The large tech companies with greater inertia and resistant to change may suffer in hard times.