A Global Recession Will Reinforce Corporate Enterprise Reliance On Hybrid Workplace Software
26, May 2022
A Global Recession Will Reinforce Corporate Enterprise Reliance On Hybrid Workplace SoftwareThe IMF has recently warned about rising global food prices, broader supply-side driven inflation, rising interest rates and plummeting consumer spending as inter-related drivers of a coming recession. US President Joe Biden has recently admitted that a recession cannot be ruled out. The UK government reported that the national economy contracted in March. Sweden-based e-commerce firm Klarna also recently announced that it plans to cut 10% of its workforce, anticipating a tightening of consumer spending in the coming months.
As such, heads of real estate, finance and facilities management will be under the gun to control costs and shore up their firm’s operational resilience. One way they have done this during recessions is to use historic space occupancy data to quickly identify buildings with chronically low utilization, which then enabled them to sub-lease or release said property, saving millions in the process. Indeed, Verdantix has heard from a North American Connected Portfolio Intelligence Platform (CPIP) vendor with strong space management capabilities, that one of their strongest periods of revenue growth came during the 2008 financial crash and its aftermath. During 2020 and 2021, at the peak of economic uncertainty in the wake of the covid pandemic, CPIP, specialist and start-up hybrid workplace software firms all experienced double-digit (and sometimes triple-digit) growth.
Will this trend continue if there is another recession? The likelihood is that it will. During the great recession, there was a scramble to eliminate excess space from real estate portfolios. During the great lockdown recessions, there was a scramble to set up scalable monitoring solutions (using existing data such as historic space reservations and Wi-Fi networks) to enable social distancing and return-to-work initiatives. Moreover, nearly all commercial firms realized the importance of booking systems, as agile working spread rapidly and assigned seating died overnight. With a potential 2022/23 recession, both of these trends will be present, with long-term cost control and hybrid working being dual priorities to manage this time round. And indeed, the shift in working patterns with more hybrid work is at the heart of finding more space to release.
Recession or not, corporates will continue to rely on and invest in space analytics, planning and reservation tools. You may ask, why would they invest more into software when they are seeking to cut costs? The simple answer is that if real estate executives do not feel they have enough data to justify big decisions, they will spend to obtain that data and derisk such decisions. Releasing buildings that employees find useful, or bringing staff back to overcrowded offices, are not desirable outcomes.
In our upcoming webinar, Market Size And Forecast: Space And Workplace Management Software 2021-27, taking place on June 15, Verdantix will explore in more detail how this exciting market will evolve in the years ahead. Sign up to get a first look at this new study, which will refresh the growth forecast and provide granular data cuts not provided in previous studies.