Runaway expenses, though, especially rent, were the real spur behind the experiment.

The rent on Rank Xerox’s international headquarters, in London, had doubled in just two years. Small wonder, then, that Rank Xerox wanted to trim every speck of gristle from its headquarters budget. And by late 1983 the knife seemed to be slicing well. The forty-three networkers were helping Rank Xerox save a third of a million dollars a year in office space. Judkins said: “We have rid our books of this sterile expense.”

In the United States, Mike Bell, Xerox real estate executive, is busy toting up the advantages of another form of telecommuting—moving some corporate operations out of expensive downtown areas.

“Why should a company have row after row of workers taking up desk space in back rooms in large cities,” he says, “when it could modernize its office machinery and farm them out to offices in the suburbs? An average office worker and his desk take up 200 square feet at $20 a foot in big cities. That’s $4,000 a year just for rent. Suppose you could move him to a suburb with rent at $12 a square foot. Then rent would be only $2,400 a year.”

If the employee was in a suburban office tied in to headquarters via a computer-telephone hook-up, you might save as much as $3,000 over five years—even if you counted expenses like equipment costs.[[67]]

And you might save $8,200 per employee over a five year period if the workers were at home.

The chart below assumes that (1) each employee takes up 200 square feet, including corridor, aisle, and file space, (2) the downtown rent is $20 a square foot, which is perhaps half of some Manhattan rents, (3) the suburban rent is $12 a square foot, (4) you pay home workers $4 a square foot in rent, (5) your investment in equipment for each telecommuter is $4,000, (6) the effective tax rate is 35 percent, (7) you’ll receive a tax credit of ten percent of the computer gear’s initial cost and (8) depreciation is straight line over five years. Yes, $4,000 is more than the computers might each cost; the inflated figure helps fudge for miscellaneous expenses like moving expenses and phone bills. As for tax laws, they can change. But the credit—as distinguished from depreciation—accounts for only a tiny fraction of the money you’re saving. One last point: the chart below doesn’t consider interest on what you’d be saving in rent.

Large companies, of course, could mix different forms of telecommuting and employment arrangements. They might even let some workers shift back and forth. Some employees, some of the time, anyway, would work at home, while others might be at companies’ regional or neighborhood telecommuting centers of one kind or another.

Jack Nilles’s kind of neighborhood center—at least one of the kinds he’s proposed—would be organized by corporate function. One center would bring all the accountants together, for instance,

A COMPARISON[COMPARISON] OF OFFICE EXPENSES PER WORKER
CASE 1: DOWNTOWN OFFICE
Years012345Total
Rent04,0004,0004,0004,0004,00020,000
Tax Reduction at 35% Rate0-1,400-1,400-1,400-1,400-1,400-7,000
Total Expenses02,6002,6002,6002,6002,60013,000
CASE 2: SUBURBAN OFFICE
Years012345Total
Rent02,4002,4002,4002,4002,40012,000
Tax Reduction at 35% Rate0-840-840-840-840-840-4,200
Investment4,000000004,000
Tax Credit-40000000-400
Depreciation Credit0-280-280-280-280-280-1,400
Total Expenses3,6001,2801,2801,2801,2801,28010,000
CASE 3: HOME OFFICE
Years012345Total
Rent08008008008008004,000
Tax Reduction at 35% Rate0-280-280-280-280-280-1,400
Investment4,000000004,000
Tax Credit-40000000-400
Depreciation Credit0-280-280-280-280-280-1,400
Total Expenses3,6002402402402402404,800