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Does Google’s withdrawal from signing a lease for another new office building in Dublin mean it is quietly lowering its Irish ambitions?
The answer to both questions is almost certainly not. This is why.
1. Office space is not the indicator it was a year ago
Do you remember the pandemic? Big tech companies have made commitments to allow people to work from home (or “flexibly” in Google’s case) for the foreseeable future. That means getting a new office space is not as important as it was in 2019. Due to its own growth, Google was desperate for more office space in Dublin. But with so many expected to work from home in the coming years, that urgency has disappeared. This is especially true given that the cost of office leases is still close to pre-Covid levels.
Why would a forward-thinking company sign a 20-year lease at a high price in the middle of a pandemic?
Furthermore, Dublin is not alone in experiencing a drop in demand for office space. The biggest story in San Francisco right now is people leaving town, and expensive offices, while still working for the same big and booming tech companies. The size of your office footprint, at the moment, is not the barometer of intentions of a year ago.
2. Google, like other booming tech companies, needs its Dublin base to make money
Google’s core business has not suffered during the pandemic. If anything, their services are being supported more now – there has been an acceleration in the shift to digital work and online platforms. Like Microsoft, Facebook and others with major bases in Dublin, the company still needs people to maintain and improve this business. Dublin has never been considered a low-level weak link – its sales and engineering functions are especially crucial to Google’s bottom line.
“Anyone who says that Google will withdraw from Ireland does not know how foreign direct investment [foreign direct investment] it works, ”said former Google senior executive and former Twitter Ireland director Stephen McIntyre. “They will not withdraw, not out of loyalty to Ireland, but because it is bad for business. A country dependent on technology FDI should not be distracted by office space and what that means for the number of future jobs. Lower value jobs will eventually disappear anyway, quietly, without a sudden “retirement”. If not due to Covid, then [it will be] due to automation. That should be old news. “
3. Google is strongly hinting that the office rent does not reflect any downgrading of its Dublin plans.
“We are committed to Ireland and continue to invest in our Irish operations,” the Irish office said on the matter this week. “After much deliberation, Google has decided not to proceed with the Classification Office lease.”
But they would say that, right? Sure, but executives seem genuinely amused at the idea that walking away from an expensive office lease at the height of a pandemic with ‘flexible working’ on the rise represents more than what it is on paper.
4. If office space doesn’t matter, why bother having a hub in Dublin?
Mainly because most technology companies still strongly believe in physical offices, despite being at the forefront of home work offerings. Sundar Pichai, CEO of Google, certainly falls into this category. Netflix’s Reed Hastings has also spoken out on this issue. Their logic is that there are very few companies that manage to be productive and innovative at scale with a completely remote workforce. (Zoom is one such firm, but it could be argued that other global health factors have stepped in to drive it.)
Additionally, Google has two new office properties that will go live soon. You have invested a fortune in your buildings. You have done it for good reason. Despite all the talk about “working from home”, there are thousands of ambitious young workers who really want to work in a common office environment. They don’t have their three-bedroom townhouses with gardens and home offices. They have yet to meet their life partner. They want to be close to the bustle of other people, not the quiet of a bungalow 40 km away. They also want to learn from other people and get promotions quickly, not adapt to roles they have become used to.
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