SINGAPORE – 26 September 2022 – New data reveals that an overwhelming majority of CFOs are cost-cutting amid rising inflation and recession concerns. Senior financial executives are expecting the economy to enter into recession in the next 12 months and have begun cutting costs in preparation, according to new research1 from IWG, the world’s largest flexible workspace operator.
The study, conducted among 250 CFOs, found that 91% believe an economic crisis is inevitable, with more than a third (36%) of these predicting a recession this year. As a result, nearly all (97%) have started implementing, or planning to implement, cost cutting measures. Facility spend is a key target for businesses, with two thirds (65%) of CFOs targeting a reduction of more than 10% per year.
Hybrid working is viewed as a key way of achieving saving targets, with 82% of CFOs saying it is a more affordable business model as demand for office space remains high. Companies have long used office space inefficiently, but the proliferation of hybrid and remote work has them re-evaluating these expenses. In fact, among Fortune 500 CEOs, 74% said they plan to reduce office space.
On a similar note, the inaugural CFO Insights Survey 2021 found that more than a third (34%) of the CFOs and finance leaders surveyed in Singapore said that reducing exposure to office leases and utility costs would be their top priority when reviewing operating expenses – implying that firms here are more likely to adopt longer-term hybrid work arrangements. A separate survey from KellyOCG also found that 63% of executives in Singapore recognize the value of a hybrid work in meeting business goals. In fact, IWG recorded an 85% increase in on-demand membership sales in Singapore from Q4 2021 to Q1 2022 – a reflection of the growing preference among Asia Pacific companies to retain hybrid working arrangements even as employees return to the office on the back of easing restrictions.
CFOs surveyed confirm this trend, with half (50%) of businesses saying they have already opted for short term leases or shared workspaces, giving them flexibility to quickly scale up or down depending on budgets, without being locked in to lengthy contracts. Research shows that on average, hybrid working can save organizations an average more than S$13,000 per employee, explaining why two fifths (39%) of CFOs are considering moving to exclusively shared spaces. Global enterprise tech company Cisco went hybrid five years ago, cutting 50% of its real estate footprint and saving the company around $500 million.
But it is not just the financial savings driving the changes. More than half (53%) say they believe their workforce prefer a hybrid working model, and 87% agree that it is more affordable for employees at a time when the cost-of-living is rising. Personnel cuts are also being relied on to reduce staffing costs in light of economic pressures, with more than two fifths (44%) of CFOs introducing forced redundancies and others looking at reviewing current staff salary bands (28%) and reducing the number of promotions (27%). CFOs are also limiting the onboarding of new staff members, with more than a third (36%) reducing new hires and a similar number delaying new hires (33%).
IWG has committed to opening 1,000 new spaces in the next year to cater to the increasing demand for hybrid working, with the majority set to open in rural and suburban locations as it sees enquires for locations outside of city centres rise by 36% since January this year. Research shows that a resounding 77% of employees say office close to home is a must-have for their next job. In Singapore, visits to IWG centres the city centre have jumped by close to 60% between February 2022 and August 2022.
IWG Founder and CEO Mark Dixon commented: “Hybrid working helps businesses stay competitive and resilient especially in times of economic uncertainty. With economic pressures mounting, research shows that CFOs and business leaders are adopting hybrid working for many reasons. Not only does it support the work-life balance and wellbeing of their teams, but it provides a meaningful boost to a company’s bottom line. Independent studies have shown that businesses can save more than S$13,000 per employee working in the hybrid model”.
IWG is leading the workspace revolution. Our companies help millions of people and their businesses to work more productively. We do so by providing a choice of professional, inspiring and collaborative workspaces, communities and services.
Digitalisation and new technologies are transforming the world of work. People want the personal productivity benefits of living and working how and where they want. Businesses want the financial and strategic benefits. Our customers are start-ups, small and medium-sized enterprises, and large multinationals. With unique business goals, people and aspirations. They want workspaces and communities to match their needs. They want choice.
Through our companies we provide that choice, and serve the whole world of work: Regus, Spaces, No18, Basepoint, Open Office and Signature. We create personal, financial and strategic value for businesses of every size. From some of the most exciting companies and well-known organisations on the planet, to individuals and the next generation of industry leaders. All of them harness the power of flexible working to increase their productivity, efficiency, agility and market proximity.