Indian cos spending more on marketing, not on property

Indian business is exuding confidence and this rising optimism is increasing business spend in India, a survey said.

Departmental spending is on the rise, specifically sales and marketing costs, the latest edition of the Regus Business Confidence Index said.

While companies are reporting rising revenues and profit, interestingly many are going slow on expenses related to premises and property, Regus said in a press release here.

“Departmental spending is predicted to rise this year, with the exception of property where companies are maintaining a strict cost control policy,” it said.

Globally, 81 per cent of companies expect to freeze or cut their property spending and in India, a large majority (70 per cent) expect to follow suit, it said.

Cautious optimism

This matches other research studies which reveal a general trend towards lower-cost working practices, it added.

The Regus Country Head, Mr Madhusudan Thakur, said, “That business confidence is returning is great news as is the fact that so many companies are reporting rising revenues and profit. Planned departmental spending increase for 2011 are a further confirmation of returning confidence.”

Mr Thakur said that it seemed that firms are only investing where there is a clear bottom line return, such as sales and marketing, whereas spending on property will continue to decline in 2011.

“This is a remarkable change from just a few years ago, when the combination of economic upturn and increasing employment would have generated a boom in traditional commercial property spending,” he said.

Inflationary pressures remain strong despite the Indian Government's bullish growth predictions, he said.

“So it looks like firms are remaining cautious in respect to property costs and now prefer to minimise risk and opt for more flexible and scaleable arrangements,” Mr Thakur said.

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