Co-working, the way ahead for Indian professionals

Co-working, the way ahead for Indian professionals

Man is a social animal. One of the fundamental phrases used in any attempt to describe human nature, this sentence captures the collective and communicative fabric of humans ideally. While history mostly describes the destructive aspects through wars and conquests, it often fails to put the spotlight on the collaborative and constructive efforts of humanity that cause revolutions and societal transformations. One such revolution is currently waiting to transform India’s work culture-co-working spaces.

First used as far back as 1628 in the book Ecclesiastes, The worthy church-man, the earliest use of the term, co-working, however, was to describe the associative power of God and its representatives. The concept, changed over time into what it is today, reflects a space which allows various organisations and individuals to come together and use shared resources to work independently, yet together. And this phenomenon has currently found a large number of takers in the Indian economy, specifically the startups.

Co-working spaces - An idea long awaited

While the co-working idea was firmly established in the west as far back as 1999 with the establishment of the still running 42 West 24 space, in India, only the last couple of years saw its strong emergence. Essentially, the co-working model is straightforward, a provider leases an office space to rent it out to multiple companies and freelancers, charging according to the number of desks and hours used. Simple? You bet it is.
India’s thriving startup culture, with an expected 11,500 tech startups, apart from many more, by 2020, has greatly enhanced the need for low-cost and flexible workspaces, leading to the flourishing of this segment. In fact, leasing of co-working spaces is expected to touch 10 million. sq. ft by 2020, with expected investments to be worth $400 million by 2018, According to a study by property consultant Jones lang LaSalle.

The things that work for co-working

On an average, 35% of the cost in a company’s accounting statements, is attributed to real estate and infrastructure. For any bootstrapped start-up, an alternative that can significantly cut down on this cost, and that too by a huge range of 20-50% is a godsend. Co-working spaces, through charging users by the hour and providing combined essential amenities such as internet, telephone, administrative help, front office, utilities etc. helps to cut down on costs massively by incorporating them into the cost per seat. So much so, that co-working providers offer discounts as steep as 99% on various services, citing that the basic service offering generates enough cash to justify the offering on the scale of revenue and profits. Besides, there’s zero deposit and no long-term lease, so moving out of a co-working space is hassle-free!
Moreover, a feature that attracts modern businesses increasingly towards co-working spaces is the huge scope for networking offered within their premises. Apart from regular interactions with employees and executives of various organizations working in the same building, many co-working space providers organize weekly events and idea-sharing sessions in which all members can participate. Most importantly, however, it also facilitates the formation of non-professional connections, such as forming hobby groups for sports or travel, thereby successfully combining the two poles of doing work while making friends!

Re-focusing the target - How MNCs and corporates are emerging as top markets

While in the west, the co-working trend started aiming at the big corporates, in India, start-ups formed the initial target audience considering the cost benefits and economies to scale. With time, the co-working space providers in India realized that star-ups are not enough to make them prosper and they started changing their business models as per the strategy followed in the West. Hence, to earn profit, Indian players also shifted their focus to corporates. Now, co-working giants in the country are offering MNCs and corporates the flexibility to scale up or scale down at any given point of time. MNCs on the other hand, have gained greater flexibility as they can now easily afford to diversify into different domains and operations without having to incur high establishment costs. Furthermore, it provides them with an easy route to expand into the untapped markets of tier-II and III Indian cities, apart from serving the age-old problem of finding ideal work locations that are geographically feasible for clients as well as employees.

Going ahead

Although at a nascent stage, co-working appears to be one of the brightest stars in the future galaxy of Indian business, underlined by a steady stream of iconic global investors such as Sequoia Capital pouring its finances in the sector. Going forward, certain challenges such as the unsuitability of conventional lease terms of nine years for modern-day businesses, a lack of awareness among property owners about co-working and bureaucratic hindrances for businesses in owning properties can act as impediments to an otherwise robust growth predicted for the sector. Established MNCs are seeking flexible solutions and shorter lease terms to address the challenges they face within the current economic climate. For co-working space providers however, the real challenge lies in developing a vision that presents co-working as a service beyond being a commodity. Through diversification and utilizing the first mover advantage by tapping into the potential markets in tier-II and III cities, co-working space providers can herald a paradigm shift-one that resembles the telecommunications revolution that altered the time fabric of global businesses by making instant, inexpensive business communication a reality. Only in co-working’s case, the fabric to be redefined is space!

(The writer is Chief Evangelist
at GoWork)