Location, Location, Location: Will location continue to be important in the new world?
Covid-19 has caused a fundamental change in how and where we work – this presents an opportunity for regional towns and cities to attract new business, particularly in asset management, with benefits for employees and employers alike.
2020 will be remembered for Covid-19. We have all been impacted in ways we could never have imagined. “Social distancing”, “WFH”, “Zoom”, and “stay safe” are now part of our daily lexicon. The impact on both the global and Irish economy is unprecedented. With most firms in crisis response mode and implementing new ways of working, the Asset Management industry has proven itself to be resilient. The majority of employees are now working remotely. Business as usual continues but in a very different way.
The timescale on a return to “normal” is uncertain. However, when restrictions begin to ease, the question arises: will everything return to normal for businesses? Will the 20,000 people employed in the Asset Management and related FinTech sectors, three-quarters of whom are in Dublin, want a return to commuting two to three hours a day? Could a shift in mindset represent an opportunity for the regions to attract businesses, especially in Asset Management? There are several aspects to this scenario, for staff as well as organisations.
Employees - Benefits:
- Less time spent commuting. A client said recently: “If people conclude that they have been as productive WFH, why would they continue to subject themselves to the wasted 10 - 15 hours a week in traffic?” Ten to 15 hours is a lot of time to get back in our busy lives. While WFH has worked well, people still need social interaction, and solely WFH is not sustainable either. This is where the regions can offer a real alternative. Pre Covid-19, most of us considered the office as our working environment. This was expanded to include the home during lockdown. And looking beyond this, regional hub shared office locations could be the third location as people seek out an office environment. There is potential for increased localisation in a globalised world.
- For many, the cost of living in major centres has pushed the ability to get on the property ladder out of reach.
- People may experience a better quality of life, while being closer to family and friends.
Company - Benefits
- Wages are typically lower outside of Dublin, reflective of the lower cost of living. Commercial office rents are also lower. Companies who transition successfully, and who have invested smartly in cloud based technology, will help manage their cost base. The opportunity to reduce fixed costs by 10 to 15% (or more) annually will be attractive.
- Companies who can offer employees this true flexibility will benefit from better staff retention and loyalty versus those requiring all staff onsite in a city centre location.
- The Asset Management industry is ripe for continued digital disruption and can really lead the way here. Agile ways of working will become the norm. Companies who offer such flexibility will be living by their ESG values and can help drive the environmental agenda (e.g. less cars commuting long distances for hours each day).
Regional cities/towns - Benefits
- Increased direct employment leads to increased indirect employment.
- These roles are highly skilled and well paid. More jobs locally lead to more people living locally which leads to more money spent locally.
- Dublin - Benefits:
- Less pressure on the transport systems.
- Less pressure on rents and commercial real estate.
- An increase in capacity will allow Dublin to continue to position itself as a key choice for new companies looking at locations for European headquarters for their business.
The Asset Management industry outside of Dublin has significant potential to further grow its footprint. Regional Chambers of Commerce, Enterprise Ireland and the IDA, in conjunction with industry leaders such as Irish Funds and third level education institutions, could focus on identifying key sectors and putting centres of excellence in place for specialist industries, such as funds, fintech and cybersecurity. Creating a centre of excellence for asset management is what Ireland did well to build and grow this industry in the early 1990s. Now is an opportunity for regional cities and large towns to bring this idea to a local level by creating regional specialised centres of excellence.
The Asset Management Industry in Ireland is already a strong bellwether for regionalisation. Change creates opportunity and Covid-19 presents an opportunity to take this to an even greater level. Will one of the lasting impacts of Covid-19 be a lead from the private sector in providing true regionalisation? Certainly, Asset Management is showing this is possible.
Paul Martin, Director, PwC