The Hindu Business Line : A ‘gateway’ for tech SMEs

Shriram Properties and Infrastructure Pvt Ltd (SPIL), the developer of the IT SEZ, Shriram The Gateway, is tailoring its latest IT tower to suit the needs of small and medium players in the IT sector.

The Gateway is offering value-added features that will give significant cost benefit to small and medium IT companies that need space.

The company is targeting this segment with a new feature that will bring down the cost of leasing space by about 30 per cent, a valuable saving in these tough times for IT companies, says Mr R. Murugesan, Chief Executive Officer, Shriram Properties and Infrastructure.

Pay for what you use

The good part for the IT space developer is that the new feature will not compromise its own revenue — it will, in fact, be a new revenue stream, he says.

So what is this new feature?

Typically, IT companies use the workstations and supervisory staff’s rooms on a 24-hour basis. But about a third of the space in most IT companies is under-utilised — the pantry or cafeteria, conference hall, meeting rooms, videoconference rooms are some such areas — but they still have to fork out the same lease rent, irrespective of the level of usage.

What SPIL plans to do is offer such facilities as a common infrastructure at the 4 lakh sq.ft of space in the fourth tower that it is now adding to its existing SEZ facility on NH 45 near Vandalur, a suburb to the south of Chennai. IT companies would only pay for the time and space they use, he says.

For instance, out of about 10,000 sq.ft, a small IT company may need to seat about 100 workers, and only about 70 per cent of the area would be for the company’s core business and the rest would be for various related activities and common amenities.

But assuming a lease rate of about Rs 40 a sq.ft, the IT company would have to fork out Rs 4 lakh a month even if a part of the space is underutilised. But now the lease cost to the company would come down by 30 per cent and it would pay for only the core area it needed. The rest of the area would be on offer as common infrastructure facility that can be paid for only when needed.

Additional saving

An additional saving to the small companies will be the investment in the equipment that they can do without. A quality videoconferencing equipment could cost up to Rs 7 lakh, not to speak of various other electronic hardware such as audiovisual equipment, photo copiers and the like.

SPIL will tie up with a leading facility management company that will manage the business centre which will save on capital expenditure and rentals for the IT companies.

Over 40,000 sq.ft of space — about 10 per cent of the new construction coming up — will be earmarked for the business centre. This will have videoconferencing facility, board rooms, and rooms for training, discussions and meetings, and food court.

This will be a new business model that will generate income for The Gateway while offering value and savings to the small companies.

When completed, the Gateway will be among the largest of IT SEZs with about 5.5 million sq.ft of built-up space distributed amongst 14 towers of about 3.5 to 4 lakh sq.ft each. It now has three towers of 4 lakh sq.ft each which houses some of the largest IT companies and global players.

But with the changing economic environment, it is seeing a rise in demand for space from smaller players and the fourth tower is tailored to suit the needs of both the large and small players with scalable office space that offers this new feature for those who need it, says Mr Murugesan.

To tap this emerging market from smaller players, Mr Murugesan says SPIL is also looking at offering space with fit-outs.

Clients will just have to bring in their IT equipment and plug it in. Fit-outs can cost up to Rs 1.5 crore for a 10,000 sq.ft space, which now can be amortised over five years with the rent, he says.

Normally, IT developers offer the bare shell with a finished lobby, he says.

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