Market Overview

How To Play The Shift From Offices To Work From Home

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With the coronavirus pandemic reaching new heights in some countries and gathering momentum for a second wave in others, a continuing trend towards remote work has established itself. Even post-pandemic, distributed workforces are going to be maintained, according to 77% of respondents in a recent survey among executives

Consequently, businesses are continuously striving to find appropriate tools to maximize the productivity of their remote workforce. Remote workforce management and team collaboration tools are used to assign tasks, share files, keep calendars in sync, and communicate effectively. In addition, separate tools for tasks such as employee monitoring are of ever-growing importance to ensure the focus of team members. 

Here’s who the biggest players in the market currently are, how the market for remote workforce management and employee monitoring tools is set to develop, and which stocks to watch out for. 

Market Growth Overview 

Even before the COVID-19 pandemic hit, the global team collaboration market was valued at $9.5 billion - and was expected to grow at a compound annual growth rate (CAGR) of 12.7% by 2027. The coronavirus kicked this development into overdrive, with millions of businesses and institutions deploying work-from-home (WFH) practices. While stocks in other industries continue to flounder after the sharp dip around March 23, those of companies providing tools for team communication recovered quickly, even exceeding their former highs. 

Similarly, the global employee monitoring software market was valued at $725 million, set to experience a CAGR of 7.1% and to hit $1.3 billion by 2027. Major drivers for the expansion of such software include the widespread use of social media platforms and increased usage of the internet for non-work activities among employees. Now that many team members are no longer confined by the social conventions of the office setting, these issues become ever-larger threats to productivity. 

Team Collaboration and Remote Workforce Management Giants 

Currently, the two biggest single players on the market in terms of team collaboration tools are Atlassian Corporation plc (NASDAQ: TEAM) and Slack Technologies (NYSE: WORK). 

Atlassian offers a variety of solutions that benefit a distributed workforce. Among them is Trello, a project management and team collaboration platform, Jira, a solution for project and issue tracking, Confluence, a wiki-based team collaboration, and document sharing platform, and Bitbucket, a shared code repository for developers. The company went public in December 2015. Despite falling with the rest of the market in early March, the stock quickly rebounded and is currently trading near all-time highs. 

A few years back, Atlassian also tried to break into the enterprise messaging market, without success. Instead, it sold its intellectual property in that regard to Slack, a company offering a messaging-channel-based team collaboration software.  

As part of that deal, Atlassian acquired some Slack stock. After the March crash, Slack—which went public in 2019—was among the biggest winners, seeing demand spike. The company’s stock soared and had more than doubled by early June.

Though the company’s Q1 report put a damper on that enthusiasm, the stock still remains a solid performer. Slack’s first-quarter revenue soared 50% year over year to $201.7 million, driven by a 28% rise in paid customers.  

Tracking Remote Work Stocks Via An ETF 

The growing importance of tools to facilitate remote work, and of remote workforce management and employee monitoring in particular, is demonstrated by the fact that a new ETF is dedicated solely to theme. 

Launched by Direxion in late-June, the Direxion Work From Home ETF (NYSE: WFH) tracks an assortment of 40 stocks related to remote work. It is based on the Solactive Remote Work Index, and encompasses cloud computing, cybersecurity, online document management, and remote communications.

Slack and Atlassian can both be found among its top 10 performers. It also includes companies like Workday Inc (NASDAQ: WDAY) a financial and human capital resource management platform, and of cloud communications providers that also offer unified communication solutions for remote teams, such as Avaya Holdings Corp (NYSE: AVYA), RingCentral Inc (NYSE: RNG), 8x8 Inc (NYSE: EGHT), and Vonage Holdings Corp (NASDAQ: VG

The Bottom Line 

The trend towards remote teams can now be seen as firmly cemented in business life, evident both in the infrastructure now implemented and the mentality of executives. Consequently, the demand for tools facilitating remote work on all levels is bound to stay high. 

A second surge in demand - such as the one that many companies experienced during the abrupt shift to remote work when lockdown measures were hurriedly put into place - remains unlikely. Nevertheless, remote work tools in general remain a solid bet. 

Employee monitoring and team collaboration tools, in particular, present tantalizing opportunities, considering that the growth rates projected pre-corona are now set to be exceeded.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

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