Big Tech’s big problem: Let employees stay home from expensive campuses or ‘risk losing 30% of their workers’

By Jon Swartz

The tech upstarts of a previous generation could lose workers to a new generation of tech startups after becoming the too-big-to-be-fun giants who want workers to *gasp* come into the office

Tech workers got used to working from home during the pandemic, and that could be a big problem for Big Tech.

Companies such as Apple Inc. AAPL, -0.48%, Google parent Alphabet Inc. GOOGL, -0.38% GOOG, +0.07%, Facebook Inc. FB, +0.15% and Inc. AMZN, -0.92% have committed to bringing employees back to their giant, expensive campuses for at least part of each week. Big Tech has already seen a gradual retreat of workers toward smaller companies and startups that have received a wave of cash during the pandemic, but that could turn into a full-fledged exodus in what some are calling a generational change in the tech industry.

About four in 10 people said they would look for another job if they are forced to return to the office full-time, according to a new analysis by the University of Chicago’s Becker Friedman Institute for Economics. Of particular concern to many employers is that half of Gen Z employees say they’ll leave their current job if they’re not given a hybrid work option, according to a new study commissioned by workspace-technology company Kettle of 1,000 U.S. Gen Z workers.

In tech, the number may be much larger. Zoom Video Communications Inc. ZM, -3.82% said this week that only 1% of its employees expressed interest in working full time in the office, while more than half preferred a hybrid model and a quarter wanted to work remotely full-time. The videoconferencing company in response announced a return-to-work model that mixes remote and in-office work.

“There is a sentiment that people can work from home very effectively, and they may not want to return to the status quo of the office,” Mabel Abraham, an assistant professor of management at Columbia Business School, told MarketWatch. “We have reached a pivotal moment for employers to stick with the status quo and risk losing 30% of their workers or to reinvent how they do work.”

Midsize Silicon Valley companies are showing more flexibility with work-from-anywhere incentives, as well as setting up operations in smaller cities. Twitter Inc. TWTR has decentralized its workforce the past few years and actively hired in Atlanta and Miami. Dropbox Inc. DBX estimates it will open in at least a handful of new cities over the next 18 months.

Big Tech seems to be sticking to its guns, however. Employees at Apple and Google objected to being rushed back to the office before plans were delayed by the spreading COVID Delta variant, and experts with whom MarketWatch spoke suggested it leaves them vulnerable to having employees poached by smaller public tech companies and startups. Apple and Google have plowed billions of dollars into sprawling campuses teeming with sophisticated high-tech machinery and infrastructure that function as latter-day industrial hubs.

Within these multi-building facilities are elaborate ecosystems of food service, gyms, medical facilities and custodial services that employ thousands of people, whom some Big Tech companies have been paying throughout the pandemic. The campuses and the services they offer were considered perks by employees before the pandemic, but aren’t as alluring as the comforts of working from home, free of an excruciating commute and overcrowded offices.

At the same time, smaller companies that are flush with cash from venture capitalists or initial public offerings seem very open to shaving the costs of occupying and maintaining office space in the pricey San Francisco Bay Area while attracting proven talent.

“I strongly believe only 10% of people want to go back to the office full-time. We are targeting talent at Big Tech with the flexibility to work from home,” Greg Woock told MarketWatch.

Woock, the CEO and founder of San Jose telecommunications company Pinger Inc., reopened his offices in late July with the expectation that most employees will remain remote with only occasional office visits.

“People want to work remotely, and they are voting with their feet,” he said.

“Remote work is a good employee recruitment and retention tool,” said Todd Blaschka, chief operating officer at analytics company TigerGraph, who has seen a flood of resumes from Big Tech workers and will also use a flexible atmosphere to woo them.

“Remote work is increasingly a bargaining chip for very valued employees,” said Columbia Business School professor Adam Galinsky, who expects remote work to become a major recruiting magnet. “The attitude is, ‘You want to retain me, then I get to work remote three days a week.’”

For the past year overall, Big Tech has been pretty safe. The average attrition share — the number of U.S. employees who left a company divided by that company’s total number of U.S. employees — across Microsoft Corp. MSFT, -0.02%, Apple, Facebook, Google, Inc. AMZN, -0.92%, Oracle Corp. ORCL, +0.10%, International Business Machines Corp. IBM, +0.92%, HP Inc. HPQ, +0.31%, Inc. CRM, +0.01%, and Intel Corp. INTC, +0.06% was 7.6% during the last 12 months ending July 2021, down from 9.9% a year earlier, according to a LinkedIn study conducted specifically for MarketWatch.

But the predicted attrition rate in tech in the second quarter, 11%, exceeds the overall job market at 8%, as more workers insist on working from home and taking more control of their lives during the pandemic, according to Elora Voyles, people scientist for employee-engagement software company Tinypulse.

Three out of four employers reported their remote workers were experiencing exhaustion, and about two-thirds of employers believe a hybrid model is the best approach to work going forward, Voyles said.