As a direct result of considerable investments made by the Saudi government in several sectors to diversify the economy over the recent years, the result has been in an expansion of the Gross Domestic Product (GDP) in Saudi Arabia of 2.13 percent in the first quarter of 2013.
Businesses across all sectors are seeing an increasing demand for capital.
This rising “capital intensity” is being driven by a variety of factors — from the need to invest in increased automation and in improving supply chains, through jumps in the price of natural resources caused by rising demand in developing countries to costs associated with increased regulations.
The only way for organizations in Saudi Arabia to respond is through multiplying their efforts to cut costs in other areas.
So, just as they have become used to outsourcing “non-core” functions, such as information technology and accounting, they should look at doing the same with their real estate and, as a result, find more efficient places and ways in which their people can work.
The proliferation of mobile technology and smart devices is driving changes in working patterns and pushing the numbers of remote workers to all-time highs.
A global survey by Regus shows that workers highlight a shorter commute (12 percent) and location flexibility (18 percent) as ways of helping them spend more time with their families.
Furthermore, Middle Eastern businesses can benefit too, as flexible work is thought to improve productivity (82 percent) and help staff retention (82 percent).
The trends are being led by small companies.
But against this backdrop businesses of all sizes are increasingly finding it hard to predict their space requirements over a few months let alone a few years.
For more than 20 years, Regus has helped deal with this uncertainty by offering the advantages of flexibility and agility, especially to businesses that are expanding or moving into new territories.
Increasingly, though, alongside these practical arguments, there is a strong economic case to be made for adopting such a solution.
Indeed, companies in Saudi Arabia that allow their workforces to go mobile, remote or flexible can save up to 90 percent on conventional property options, and also make their employees more effective.
Just as businesses that outsource their IT or back-office functions benefit from using specialists with up-to-the-minute knowledge of the activity, so those that adopt a more flexible approach to real estate can ensure that they have premises that meet the latest standards in technology, energy efficiency and the rest.
They can also help make their employees happier and more productive by giving them access to premises that are well located and convenient and avoid the daily commute.
The pressure to make the best use of capital is not going to diminish any time soon.
As a result, businesses that can reduce their exposure to non-core costs are likely to fare best in this highly competitive environment.
Moreover, becoming more innovative and agile through encouraging employees to adopt flexible, remote or mobile working is a forward-thinking way of “flexing” the use of capital in these straightened times.
In addition, such policies tend to deliver other, less tangible, benefits, such as better employee retention and motivation.
However, even here there are financial advantages.
It is well known that recruitment costs can total several thousand riyals per employee — creating a powerful incentive to avoid too much activity in this area.
Likewise, motivation is an acknowledged driver of productivity and hence of financial performance.
In short, there are already many economic reasons for organizations to take a more flexible approach to their property requirements.
Rising capital intensity just makes the business case more obvious and the decision more urgent.
— Mark Dixon is CEO of Regus
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