To cut cost, firms moving to co-working spaces

Co-working companies are India Inc’s newest ally in cutting costs as they are helping small as well as large corporates reduce operational expenses by up to 25 percent through the use of shared facilities.

From homegrown Tata Communications and Otis Elevators to MNCs like Amazon and Microsoft, companies are opting for co-working plug-and-play facilities, which offer flexibility and standardised services, rather than the conventional office space.

“Co-working space cuts costs by 25 per cent up to 100 seats and is 20 per cent cheaper for up to 250 seats. In the conventional office scenario, companies have to lock-in additional space for future growth, which adds to the cost unlike the flexible office space we offer,” Amit Ramani, Founder and CEO of Awfis, a co-working space provider, told BusinessLine . Neetish Sarda, founder of SmartWorks, said economies of scale kick in with co-working spaces as shared facilities like conference rooms and cafeteria can be used by all clients. “So the administration cost for maintaining facilities, which is an add-on expense for companies, is not there. We create the space and also manage it,” he said.

TCL has taken over 400 seats at SmartWorks’ Pune centre while healthcare tech firm Episource has over 1,200 seats in Chennai.

Soaring demand

“In traditional real estate, you pay for the square footage, design, build-out, furnishings, IT and Wi-Fi, all separately apart from the deposits and long-term leases. WeWork brings all these costs under one membership fee which can be upgraded and downgraded to requirement,” Karan Virwani, CWeO, WeWork India, said.

According to a report by JLL, the demand for co-working space is expected to grow at 40-50 per cent in India this year, higher than Asia-Pacific’s 35.7 per cent. Over 13 million people will work out of co-working spaces by 2020. While the demand is soaring, Sarda cautions: “Most people look at co-working as a real estate solution, but that is just the hardware. It is actually a software solution where we are creating communities and offering services,” he said.

Amit Mangla, Senior Vice- President (Procurement and Facilities), Max Life Insurance, agrees. His company is using co-working space in Gurugram for 250 people.

“The dynamic atmosphere of a co-working space encourages us to think and work in a distinct way. Not only is it cost effective, but the flexible environment also helps employees enhance their professional and personal network,” he added.

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