Is Remote Work Vaccine Resistant?
Working from Home: The Past, Present and Future

Former NASA engineer Jack Nilles introduced the idea of telecommuting in a 1973 book about the trade-offs between traffic and resources. Since then, the number of Americans working remotely gradually increased over time to about 9.8 million people by 2019—about 7% of the workforce.1 Then COVID-19 turned working remotely into a business necessity for many. By June 2020, Stanford research estimated that as many as 42% of U.S. employees were working from home.2 An April 2020 Gallup poll estimated 62% of Americans had worked at least partially from home during the pandemic.3 So, based on these numbers, somewhere between 69 million and 102 million people have worked remotely in the past year.

As vaccines continue to roll out, it’s timely to ask, “Are today’s remote work trends sustainable?” Do vaccines mean economic reopening and a return to normalcy? Is the office place experiencing its biggest transformational change since the introduction of desktop computing?

Widespread vaccinations may mean a return to pre-COVID-19 work-life, but putting genies back in bottles and reverting to old operating models can be hard to do. As companies grapple with the future of the office, they may be realizing that it presents not only challenges but also opportunities. I see three main points of consideration:

  1. The increased necessity of remote work in 2020 required investing in technology platforms to ensure continuity and efficiency.
  2. Many employers and employees feel remote work was a positive experience, and some companies are now exploring how to make flexible work arrangements a permanent option. This may result in long-term office space reductions and deepen the essential role of technology.
  3. As mindsets shift from business continuity to maximizing remote productivity, additional technologies like virtual and augmented reality could further reshape our work experience.

Cloud Computing’s Silver Lining

The pandemic-induced shift to remote work could easily have failed if not for the investments many companies had made in technology to improve connectivity and productivity. In the decade leading up to the pandemic, IT services spending exceeded $9.8 trillion,4 almost 50% of U.S. 2019 GDP.5 As a result, many companies were well prepared for their workers to decamp, using remote collaboration tools and cloud software to organize, communicate and share resources.

Flexible cloud infrastructure proved especially important during the pandemic. Online storage and processing power needs rose precipitously to support the system demands of remote networking and videoconferencing. As a result, the cloud computing segment actually outpaced the broader IT segment in recent months, growing revenue per share 41.6% compared to 6.6% in 2020.6 Amazon Web Services and Microsoft’s Azure are the dominant cloud providers; Microsoft’s cloud server segment revenue rose 20.4% during the second and third quarters of 2020.7

Although more fragmented and specialized, cloud software applications were also critical. This segment includes companies such as Salesforce, dominant in customer relations management; Workday, a large provider of human resources management tools; and Cloudera, a leader in machine learning and data storage structuring. There are lesser-known but important firms in this space, like Coupa Software, which offers cloud-based expense management solutions, and Trade Desk, a cloud-based digital marketing solution.

Videoconferencing was also key to business communication during the pandemic. Although introduced by AT&T at the 1964 World’s Fair, it was during the 2008 recession that videoconferencing was hailed as a cost-saving option. However, lack of infrastructure meant it never really became a core tool for most companies.

With in-person meetings limited during the pandemic, cloud-based videoconferencing quickly took off. Zoom’s daily meeting participants grew approximately 3000%, from 10 million in December 2019 to 300 million by April 2020.8 The company differentiated itself by being the first videoconferencing application to deliberately build its architecture for the cloud, enabling the company to rapidly scale its capabilities to meet the growing demand.

Scaling Work from Home in the Future

The sheer magnitude of the pandemic-induced office exodus is difficult to comprehend. February 2020 estimates suggest about 164.5 million people were employed in the United States. There is no official number of office workers, but a 2018 report from the Department for Professional Employees at the AFL-CIO estimated about 64 million professional and technical employees in the U.S. workforce.9 Using those estimates and a tally across six economic segments from the Bureau of Labor Statistics data, it can be estimated that approximately 80 million U.S. employees worked in offices before the pandemic.10 That likely understates the number of office-based retail employees. November 2020 data on building entry showed that only 17.6% of workers had returned,11 indicating plenty of idle office space.

Assuming companies provide about 150 square feet of space per worker, in the first surge of the pandemic, the need for office space dropped from around 12 billion square feet to about 1.8 billion. That’s the equivalent of 3,416 Freedom Towers stacked 1,149 miles high (the distance from Miami to New York) dropping to just over 454 towers, 153 miles high (the distance from Miami to Orlando).12

Office Needs Miami to Orlando

Estimated data based on modeling projections from the Bureau of Labor Statistics, Priceithere.com, Real Capital Analytics, 2017 and Peerspace, December 2019


If companies make flexible work arrangements permanent, they could realize significant cost savings, which could be conserved or invested into technology to further reduce the long-term need for office space.

Some companies may be moving in that direction. In an October 2020 Cisco poll of 2,000 global executives, 53% indicated they were likely to reduce office space,13 which could have significant implications. A modest reduction of 30% could translate to $657 billion in savings at a cost of $15 per square foot. In expensive markets like New York and San Francisco, this may cut costs by as much as $1 trillion.14

Potential Cost Savings if Office Space is Reduced Chart

Sources: Cost estimates based on data from the Bureau of Labor Statistics, Priceithere.com, Real Capital Analytics, 2017 and Peerspace, December 2019


What’s the likelihood of this? While it is reasonable to expect that today’s remote work statistics will decrease, two c-suite PwC surveys indicate current thinking: 54% of U.S. CFOs expected to make partial work-from-home arrangements a permanent option,15 and 75% of CEOs were planning to accelerate their digital transformation, which could be important to supporting such a change in work habits.16

It’s not just employers adjusting to new arrangements. An August 2020 survey by Mercer found that 90% of employers say the shift to remote has not reduced their productivity,17 and a January 2021 PwC survey found that 55% of employees would prefer to work remotely at least three days a week. Indeed, the same survey found that 87% of executives expect to make changes to their real estate strategy over the next 12 months, including possible consolidation and changing locations, and 48% are planning to invest more in communal areas.18

If these plans come to fruition, spending to support remote work could still increase. Cloud and other companies that are helping to power the work-from-home transformation could see a continuation of 2020’s growth, despite vaccine rollouts. Firms may also begin to explore more resilient operating models to prevent future disruptions, which may include more or new hardware, software and cloud-technology investment. Just how much? Companies in the Bloomberg Global Software Index generated $4.1 trillion of revenue in 2019. A $1 trillion spend by companies, redirected from office space to technology, could lift revenues by potentially another 25% over organic growth rates.19

What Comes Next: The Potential of Virtual and Augmented Reality

Imagine strolling through the office, joking with coworkers at your desk, brainstorming with colleagues in a conference room or talking about weekend plans at the coffee machine without setting foot outside your home. The virtual and augmented reality technology to do those things isn’t perfect yet, but does exist.

A virtual reality office may sound far-fetched, but we may not be as far off as people think. The technical requirements, such as the bandwidth and processing speeds required for feasible interactive, simulated offices, are rapidly evolving. In fact, the widespread use of cloud and remote collaboration systems during the pandemic suggests we may already have the capacity needed to access these environments from home.

Some of the largest technology companies in the world, such as Facebook, Google, Samsung and Sony, are at the forefront of this revolution. The technology was used for gaming early on, but organizations such as Walmart and the U.S. military are already using virtual reality for workplace training.20 An interactive, virtual work environment may be a future iteration.

Conclusion

While there may be a reduction in today’s pandemic-inflated work from home levels, we believe a sea change in the nature of office work is at hand, with the potential for continued spend on cloud and other remote work technologies.

Companies and their employees adapted in the face of COVID-19 out of necessity to keep the proverbial office lights on. Now, that narrative has evolved. People have settled into new routines, and companies are evaluating the implications of permanent remote policies.

Over time, the focus of companies may include improving employee experience and maximizing productivity while remote. As firms consider how to do this, they will need to balance productivity with flexibility. Virtual and augmented reality are just two among many innovations that could help pave the way to that future, and to futuristic workplaces. The technological tools that have come to the forefront during the pandemic will almost certainly play a central role in striking that balance for years to come.

1Pew Research Center, March 2020
2Stanford Institute for Economic Policy Research, June 2020
3Gallup, April 2020
4Statista Research Department, January 2021
5World Bank national accounts data and OECD National Accounts data files, 2019
6Cloud computing as measured by companies in the ISE Cloud Computing Index and IT segment as measured by the S&P 500 Technology Index
7,19Bloomberg
8Zoom and CNBC, April 2020
9Department for Professional Employees, 2019 Fact Sheet
10U.S. Bureau of Labor Statistics, September 2020
11Kastle Systems, Bloomberg, December 2020
12Estimated data based on modeling projections, The Bureau of Labor Statistics, Priceithere.com and Peerspace, December 2019
13Cisco Systems, October 2020
14Pricing data sourced from Priceithere.com, and Peerspace, December 2019
15PwC US CFO Pulse Survey, June 2020
16Fortune 500 CEO Survey, May 2020
17CNN, 90% of Employers Say Working Remotely Hasn’t Hurt Productivity, Mercer Survey Results, August 2020
18PwC US Remote Work Survey, January 2021
20U.S. Department of Defense, February 2020, Harvard Business Review, September 2020



Investing involves risk, including the possible loss of principal. This information is not meant to be investment advice. There is no guarantee forecasts will be met.

Indexes are unmanaged, and one cannot invest directly in an index. Past performance does not guarantee future results.

Any forward-looking statements herein are based on expectations of ProShare Advisors LLC at this time. ProShare Advisors LLC undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investing is currently subject to additional risks and uncertainties related to COVID-19, including economic, market and business conditions; changes in laws or regulations or other actions made by governmental authorities or regulatory bodies; and world economic and political developments.

Information provided by ProShares and SEI Investments Distribution Co., which is not affiliated with ProShares.

Your use of this site signifies that you accept our Privacy Policy and Terms and Conditions of Use.




Thematics Insights Delivered To Your Inbox

Get curated insights, commentary and analysis wherever you are.