Off with their head! Why more tech firms are ditching their HQs

an abandoned building covered in clouds

An increasing number of tech companies are abandoning the traditional HQ in favor of becoming “headquarter-less”, post-pandemic.  

Customer data platform BlueConic recently made the decision to close its head office location in Boston, transforming all of its US employees into remote workers. BlueConic isn’t alone. In fact, more tech companies are abandoning their traditional HQs in favor of becoming “headquarter-less”.

We have seen, of course, some massive changes to how we work, during and after the pandemic. A hybrid work model – with employees being cajoled back into the office at least a few days a week – seems to be winning out over the fully remote work model. But what are the reasons behind giving back the keys to the corporate HQ?

Recent global research by The Urban Land Institute and The Instant Group shows that while the office still has a key role to play in firms’ workplace strategies – conveying the corporate culture, stimulating collaboration and mentoring new and younger team members – only 14 percent of businesses now believe their existing workspace portfolios align completely with their business objectives and strategies.

For BlueConic, it was a combination of factors, says the firm’s CEO, Cory Munchbach. While the firm’s global footprint is expanding, more than half of its US team is no longer in Massachusetts, and fewer than four percent of the company’s population on average was using the office over a given week.

The cost of maintaining a large office in one location came at the expense of interaction across a broader swath of employees – Cory Munchbach, CEO of Blueconic

Cory Munchbach, CEO of Blueconic

“Our lease was up which afforded the opportunity to reimagine what we wanted out of physical workspace and as we looked at how our current office was – and was not – being used, it was clear that the cost of maintaining a large office in one location came at the expense of interaction across a broader swath of employees,” says Munchbach.

In other words, the company was spending a huge amount of money for a very small percentage of the same employees to work part time. Instead BlueConic is re-allocating its office spend toward interactions in various geographies. In fact, far from employees missing out on office-based interactions, the expectation is that the company will go from around ten percent of its US employees seeing each other regularly to more than 80 percent.

The cost considerations aren’t the only reason to downsize. It could be taken on board as part of a wider movement including the widespread adoption of remote working, less permanent office space, fewer geographical limitations affecting workforce diversity and less business travel which can all contribute to organizations meeting their ESG goals.

Indeed, the same research by The Urban Land Institute and The Instant Group shows that more than half (54 percent) of companies believe that ESG would have a “major” or “critical” impact on their office strategies.


No center of operations

Big tech companies, like Oracle, moved their headquarters from California during the pandemic, but went on to formally establish new main offices. And some tech giants are even doubling down on new builds and expansion, such as IBM, which is consolidating its offices and relocating to occupy a 328,000 square feet new building in New York City.

But still perhaps one of the most-high profile companies to permanently ditch its corporate hub is data software vendor Snowflake, which moved from its Bay Area HQ to Bozeman, Montana in 2021.

We do not have a single office that is at the center of Snowflake’s operations – Julien Alteirac, area VP UKI and Benelux at Snowflake

Julien Alteirac, area VP UK&I and Benelux at Snowflake

This is an option whereby instead of rolling out a fully remote workforce, businesses deploy a “hub and spoke” model, where they have smaller offices in suburban areas closer to where their employees live.

“Under the Securities and Exchange Commission’s rules, we are required to designate a ‘principal executive office’. For this purpose, we have designated our office in Bozeman, Montana as our principal executive office, as that is where our chief executive officer and chief financial officer are based,” says Julien Alteirac, area VP UKI and Benelux at Snowflake.

“We will continue to have Snowflake offices in eight US locations and an additional 18 international offices and expect to add more in the future. While San Mateo continues to remain an important location for us, we do not have a single office that is at the center of Snowflake’s operations.”


Overcoming logistical challenges of being headquarter-less

But as you might imagine, there are a number of logistical challenges that come with managing a remote global workforce.

Having the opportunity to meet each other does wonders in strengthening team dynamics – Ann Schlemmer, CEO of Percona

Database software, support, and services company Percona did have an office in North Carolina, but now operates on a fully distributed and remote basis. CEO Ann Schlemmer argues that talent is found across the globe, and the company didn’t want to limit itself to staff from a single region. Now it has more than 350 staff working around the world.

Ann Schlemmer, CEO of Percona

On managing those staffing challenges, she says: “In a typical year, we budget for all teams to have an in-person meeting. Remote work is fantastic but having the opportunity to meet each other, even for a short period of time, does wonders in strengthening team dynamics. We have teams across the world, so it does involve organizing travel and employee retreats to make sure we all maintain a sense of connection. Alongside these in-person company events, we also host the leadership team in different locations quarterly to review business strategy and initiatives and keep our working relationships strong.”

Nevertheless, it can be a struggle for some companies to implement remote culture best practices, or effectively support digital nomads.

Schlemmer says Percona provides an “onboarding buddy” for all new team members. This is someone not necessarily on the same team but someone they can turn to for help navigating the early stages of their career. This makes it clear that there is always someone available to help with any kind of question that they might have when they join.

Percona also tries to break down silos such as monthly online meetings for all employees.

“This gives everyone the chance to promote any successes they have had over the last month, as well as offload and talk through anything that perhaps didn’t go the way they had wished. By talking through these moments with other staff, employees can share their wins, gain perspective on things that did not go well, and adapt. 

“We also have a number of special interests, non-work related Slack channels such as cooking, pets, travel, music – the list goes on. Encouraging everyone to join channels relevant to them enables staff to communicate and build relationships with others, even those outside of their direct team, around personal hobbies and likes. 

“Being fully remote, you don’t have those moments of just bumping into someone in the hall or break room, so taking the time during team meetings or 1:1s to connect socially and discuss something other than business is crucial. It’s important that your team knows that you care about them as people, not just as staff.”


Fighting the tide to return to pre-pandemic working

BlueConic’s decision to close the doors on its HQ has been greeted by “widespread enthusiasm and support” from employees, says Munchbach.

“People want to see each other; they want to exchange ideas, collaborate and build relationships with one another. The framework we have will allow far more of that to happen for far more people,” she says.

The CEO is adamant that other companies will follow suit in the future and hand back the keys to their HQs. “We are in the midst of a substantial shift in work – particularly for white-collar work – and while much of what is to come remains unknown, it’s simply fighting the tide to try to ‘return’ to the way we worked pre-pandemic.”

For now, there is still uncertainty when it comes to the adoption of new working practices. But for fast-growing companies, being able to tap into talent anywhere is now as, if not more, important than having all their employees in one place. At the same time, office lease terms have shortened since the pandemic as tenants seek more flexibility within their workforce structures. It therefore seems likely that more companies will adopt a “headquarter-less” model, with their future seemingly no longer set in stone.