United States / Analyst Insights
The Office Space Evolution and Implications for IT
by Nick Masters, Lead Industry Research Analyst
Sep 03 2019

The increasing adoption of coworking spaces and virtual offices among both large and small companies is altering the information technology (IT) landscape. From startups and small businesses to large enterprises, all companies housed within a coworking space are provided IT assistance from the space’s own IT department. But where does this leave each company’s individual IT department and what does it mean for the future of IT?

Coworking space’s in-house IT departments provide for cost-efficiencies among startups and small businesses by allowing members to pay only for the IT services they need, when they need them. However, the complex IT needs of large companies limit the extent to which a coworking space’s IT department can fulfil the security measures and server capacities demanded by enterprise-level clients. In turn, coworking’s rise in popularity has different IT implications on the business environment, depending on whether you’re looking from a startup perspective or that of a large enterprise.

Startup perspective

Startups will be more inclined to use the bundled IT services offered by coworking providers as they are generally more cost-effective than hiring their own internal IT departments. With the average wage of IT consultants (IBISWorld report 54151) estimated to reach $92,771 in 2019, startups are likely to prefer paying for IT services on an as-needed basis. For example, WeWork provides general IT support services on an hourly basis in addition to one-time network setup fees. 

Additionally, the IT needs of startup companies are generally less extensive than those of a large corporation, thus the expertise and capacity of bundled or ancillary IT departments is often enough to meet the needs of startup companies, which include establishing a secured wireless network setup, managing software and hardware, and providing light training and support to employees.

A major trend reducing the need for intensive IT infrastructure is the rising adoption of cloud computing platforms, particularly among startups and small businesses. Cloud computing allows for a more flexible distribution of computer resources as everything from word processing applications to data storage is accessed through a third-party provider.

For example, Microsoft’s software as a service (SaaS) platform, Azure, allows employees to access essential software like Word and Excel through any internet-connected device. By providing an alternative to costly on-site servers and software installation, cloud computing services help to mitigate a company’s IT burden.

Enterprise perspective

Workplace transformations on the enterprise level result in greater IT-related complications. Larger companies often have unique IT needs, thus rendering the one-size-fits-all IT services of coworking spaces inadequate.

In particular, companies handling sensitive information, such as those in financial services or defense industries, must comply with stringent IT security standards. For example, compliance with IT security standard ISO 27001, which is among the most robust and widely adhered to requirements, involves a three-stage external audit of IT infrastructure to attain certification. Other IT needs specific to large companies include enterprise-level server management and integration. Typically, the complexity of a company’s IT infrastructure corresponds with its headcount and degree of globalization.

Additionally, large companies that embrace workplace transformations often do so in a piecemeal fashion, keeping the bulk of their operations in traditional corporate offices. For example, the stock exchange NASDAQ currently rents a coworking space for its technology operations several blocks away from its Times Square corporate headquarters.

Since most large companies that use coworking spaces also retain their traditional offices, their IT departments remain relevant despite the offering of ancillary IT services from coworking providers. Moreover, the IT departments of large companies often collaborate, to a degree, with the coworking space’s in-house IT services. Internal IT departments and coworking IT service providers will often work together to setup servers, ensure network security and troubleshoot hardware and software issues.

Yet, the extent to which two IT departments can effectively work together is limited due to the diverse nature of IT needs across large companies. Factors of consistency and security across a company’s operations between traditional office and coworking space often provide complications for IT departments.

Overall, large companies are more likely to retain their IT departments because they are not made redundant by the IT services offered by coworking spaces and virtual offices.

 

 

 

Looking for more information on the evolution of coworking spaces? Check out our previous Analyst Insight to discover the industry impacts of workplace transformations!