The novel coronavirus pandemic and the resultant nationwide lockdown and financial woes may prompt the Indian equity broking industry to adopt the work-from-home concept permanently, at least for a significant number of its workforce, experts say.
The work-from-home structure adopted during the 21-day lockdown period may alter the format of the broking sector forever as the cash-strapped industry is looking for cues to slash cost without actually cutting manpower.
Says Rajendra Bhambhani, Joint Managing Director of Philip Capital, who deals mainly with foreign institutional investors: "We are analysing the changing dynamics of the functioning of our company now. We might allow some departments to work from home 3 to 4 days a week. We can even call people to the office on a rotational basis. Departments like back-office or sales could work from home".
In fact, some surveys have shown that a significant number of the global workforce who have been forced to work from home because of the COVID-19 pandemic may find themselves permanently working from home. According to brokers, around 20-25 percent of the workforce could be allowed to work from home in the Indian context.
An HR official at a broking firm told Moneycontrol: "When we start allowing work from home, we will take a more formal approach to tasks such as updating daily diary, which we usually don't do when employees are in office. We may have to keep an eye on employees to ensure that they are working only for our company. More importantly, salary cuts and job cuts may also happen since the supply of employees will go up when we allow people to work from home. Around 20-25 percent of job loss may happen in the financial sector".
The trend would have an impact on commercial real estate as more companies may opt for smaller offices with limited infrastructure. "Commercial properties may correct approximately 30 percent if the effect of COVID-19 will not get diluted by September. The life of people will be different after coronavirus pandemic and companies will consider smaller offices especially when you have experienced successful business meetings and deals during the lockdown," said Pankaj Kapoor, Managing Director of Liases Foras Real Estate Rating.
Niranjan Hiranandani, Chairman of Hiranandani group, also echoed this view. "The change in trend will have an initial impact on commercial real estate like office spaces which will see a muted demand in the short term. This means numbers will drop, human resource deployment at work will be reduced in densely populated locations, and entry of workforce in a staggered pattern with a shift cycle to be devised, resulting in a new world with revised rules of social engagement and distancing," he told Moneycontrol.
Hiranandani further sees an opportunity for India in the new world order: "If the global outrage against China for the perceived role it played in the COVID-19 pandemic going ‘international’ actually happens, we might see MNC manufacturing units in China relocating – and India stands to gain the most from this shift. If this happens, we may see an influx of MNCs, and demand for office spaces may return to the levels before the pandemic," he opined.
But many believe that the COVID-19 impact on real estate won’t be restricted to commercial properties. "Commercial real estate is about 15 percent of the total market, but the repercussions of change could be felt in the residential segment too. As there is economic uncertainty, the new entrants may not buy a property. However, 2019 was one of the best years for the commercial property market, and the COVID-19 pandemic will have a huge impact on this segment," Ghulam M. Zia, Executive Director, Knight Frank told Moneycontrol.
In the broking business in India, margins have been shrinking and the cost of operations has been increasing steadily. Now, the work-from-home concept, though forced by the pandemic, has prompted these firms to think out of the box to cut costs. Says Rakesh Bhandari, Director, Nirmal Bang: "We are a broking firm with sufficient technology backup. We thought about work-from-home culture but never implemented it. Now, accidentally we have implemented it, and we are analysing it. Some departments like compliance can easily work from home. The sales department can also conduct meetings on apps like Zoom and meet clients personally only when they think a deal will materialise."
"Novel creative jobs can emerge in the broking sector like moderator or trainer for financial markets. In the current scenario, we pay for transportation and accommodation to those who give training, which can be saved if we implement work from home. It is also a good opportunity for people who are reluctant to work now due to family commitments," Bhandari further added.
Jayakumar, President, Prime Securities Limited, mentioned in an online discussion conducted by Pantomath: "We have 25 people working currently in my office at a time. But we are thinking of keeping 4-5 people to work from the office and others can work from home or come once in three days."
Another broking firm CEO told Moneycontrol on condition of anonymity: "Anyway, there are numerous software to check the efficiency of employees. The software will tell us how much time a particular employee has worked in a day and how many times he/she has gone for breaks. So, accordingly, a company can set parameters for employee efficiency. In metro cities, people spend at least two hours a day commuting, which can be used effectively if they work from home. So, work-life balance will also improve."
As far as the broking sector is concerned, market regulator Securities and Exchange Board of India also needs to relax certain rules, which it has done during the lockdown period. "SEBI and exchanges have allowed the relocation of the trading terminal to unauthorised locations now. Usually, a trading terminal cannot be shifted beyond the company headquarters or branch offices. The relocation is now allowed until April 30," a source told Moneycontrol.