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Virtualisation leads to 15-25% savings for firms, cuts office space cost

Telecom, financial services, start-ups and IT departments in various large organisations were moving some of their physical infrastructures on to the cloud much before the digitalisation and virtualisation became popular during the pandemic

twitter-logoManu Kaushik | November 6, 2020 | Updated 21:29 IST
Virtualisation leads to 15-25% savings for firms, cuts office space cost
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Virtualisation and digitalisation are the new buzzwords in corporate India. Whether it's large enterprises or MSMEs (micro, small and medium enterprises), everybody is hopping on to the virtualisation bandwagon not just for the purpose of business continuity but also to serve their clients and customers in the Covid times.

But there's nothing new about virtualisation though. Telecom, financial services, start-ups and IT departments in various large organisations were moving some of their physical infrastructures on to the cloud much before the digitalisation and virtualisation became popular during the pandemic.

But what exactly is virtualisation? To put it simply, virtualisation is a process of creating a virtual version of something - whether physical infrastructure, workflow or business processes. According to a recent report by Deloitte and CII titled Broadband for inclusive development -- social, economic, and business, the infrastructure virtualisation and work digitisation have the potential to provide overall savings of up to 15-25 per cent for businesses.

"The transition to a work from home model as a result of the pandemic led to an adoption of virtualisation, enabled by a reliable and stable broadband connection... Infrastructure virtualisation enables businesses to lower capital outlay and operational costs while improving operational efficiency and flexibility as well as streamlining processes... Work digitisation refers to the always-connected workplace in which employees are communicating and collaborating in unprecedented ways," the report says.

So how exactly businesses can (or have) achieve these savings? As far as physical infrastructure is concerned, virtualisation helps companies in saving on real estate costs, including office space and related facilities requirements, by enabling remote working. So if an organisation needed 10 seats for its 10 employees, the overall employee-to-seat ratio has reduced significantly post-COVID.

Organisations can also cut back on certain IT hardware (video-conferencing/audio-visual systems, network switches), telephony systems and travel requirements by increasing the use of digital tools. These changes would alone result in savings of 5-8 per cent, as per the Deloitte-CII report.

The other (bigger) piece of the virtualisation-led savings is work digitisation where the savings could be higher (at 10-20 per cent). Here, the digital platforms can be leveraged to reduce the transaction time and costs when the workforce, partners and customers engage with each other. Not just the workforce, this aspect also covers systems and processes. For instance, digitisation of manufacturing processes by leveraging IoT (internet of things) and data analytics can improve efficiencies through reduced waste, and improved quality.

"By integrating technologies that employees use (e-mail, instant messaging, HR applications, etc.), the digital workplace breaks down communication barriers, positioning the business to transform the employee experience by fostering efficiency, innovation and growth," the report says.

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