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Co-working Trend in India

With start-ups showing the way forward for future entrepreneurship in the country, working space is at a premium. Co-working has come as a boon for these young businesses with big dreams. Alen Paul and Hasrat Sandhu explore this world of informal office spaces.

Statesman News Service | New Delhi |

All work and no play makes Jack a dull boy. This axiomfits most people, especially those working in the office. They keep working on their desks, typing continuously, like robots, or staring at the screens of their PCs thinking of how to kill the remaining time. That too, when one is surrounded by other workers doing random acts of their own, dealing with likes and dislikes in the office, under the strict watchful eyes of the boss. Sounds way too much of a burdening boredom on the shoulders, right? This was a thing of the past. Now it’s different, in the sense with today’s fast-paced lifestyle and routine, people hailing from the so-called “super-modern” generation have started coming up with start-up ideas to lead oneself along with others in the world of entrepreneurship. Grofers, MakeMyTrip, Zomato, BigBasket, Oyo and many other such popularity-based companies built their foundation through the base of entrepreneurship.

But it is not about the popularity of these branded companies. The main question arises as to how the owners, who once used to be novice entrepreneurs, managed to share, discuss and work on their planning to make it a fool-proof model? Surely, they had to meet somewhere with people, who shared similar ideas to work upon. But meeting spots used to be either at home or at some random open spacious area. Without the unity and contribution of any group it is impossible to even think of something regarding the pros and cons of entrepreneurship and start-up plans.

But in this modern high profile times, the concept of co-working has rapidly hastened its pace among the youth community, who want to become independent by beginning something new and productively profitable not only for one’s own benefit but for others as well, all thanks to the availability of spacious office areas and rentals being provided in many rental centres, cafes and restaurants.

Birth of the concept

To define the term is easy: co-working refers to the concept of not only co-working with your team but also working within a co-located building. It is this concept that it creates a community of like-minded individuals, who not only support each other in planning but also believe in the cause of participating so as to share more creative ideas and start new projects that will boost productivity of the whole team as well as new innovations envisaged by their ideas. These individuals mostly turn out as selfemployed or just beginners who, after leaving their jobs, want to bring up something with an independent brand of their own. So how did this concept come into our lives? According to the info-graphic research done by myhq, India’s fastest growing chain of work-cafes, the co-working concept used to be known by a different term in 1990s ~ Hackerspacer. With the availability of open memberships, Hackerspaces became famously common all over in Germany in the orbit of the German Chaos Computer Club (CCC). Yet it was limited to very few spaces within the country and did not spread beyond the borders due to cost charges. Till date it is popular as workspaces in the US, where people with common interests meet, socialise, participate and collaborate their ideas into plans.

However, software engineer Brad Neuberg is credited with his decision of starting the movement of co-working in San Francisco in 2005. He came up with his viewpoint as well as an innovative idea of combining the independence of freelancing along with the structure and community of an office space. He worked with a life coach and created a three-part plan, which included three foremost elements of co-working: Making a new type of space that delivered that structure and community feel he wanted for himself and for other co-workers. With passing time, the term soon transformed itself into a hot trending craze not only among the youth but also among women, who have also set their dreams in full swing by starting their own big and small businesses. For instance, women like Kalpana Saroj, chairperson of Kamani Tubes in Mumbai, began her journey working in a garment factory, then moved to start a tailoring business; then a furniture store; opened up her own KS Film Production house (the first movie produced was dubbed in English, Telugu and Hindi Languages); and finally built up a successful real estate business, and came to be known for her contacts and entrepreneurial skills.

Why so much popularity?

“Space has always been a concern for entrepreneurs, freelancers and workat-home employees. Following the co-working trend, cafes and restaurants are also stepping into the same and why not? A co-working space allows people to work freely in a friendly environment. Following the same trend, cafe hawkers’ is also taking the initiative to come up with coworking space at their property” said Rajat and Manik Kapoor, owners of Cafe Hawkers. Due to the changing perceptions of the office, the workplace is now being looked at as an environment that needs to be managed and optimised. It is being viewed as an instrument that could drive a dynamic and vibrant culture of corporate productivity impacting the financial, cultural and environmental ethos of the organisation. The co-working operator is filling this niche and is fast being regarded as a specialist in workplace management who can cultivate an environment of collaborative enterprise that yields tangible benefits to the occupier.

These segments include those co-working spaces that fulfill just the basic requirement, a workstation or a seating area. They offer limited or no community angle and primarily target clients, who have restricted budgets but are looking for a space to operate from apart from their homes. These are usually not organised set-ups and many a times operate out of residential apartments, independent houses and cafes. However, following increased demand, several cafes and pubs across cities now operate as coworking spaces during non-peak hours. They usually offer hot desking and basic facilities such as WiFi, printer, plug points, stationary, and discounts on food and drinks. Pricing is usually lower than a typical office set up and can range anywhere between Rs 400 per day and Rs 5,000 per seat per month approximately. This type of space also offers their members all advantages of a community environment. In fact, the community angle is so well developed that a lot of players have their own apps to keep all members connected.

Now, larger companies could have their regional offices without actually investing in a complete office set up. All they need to do is take up the required number of workstations. Although not very common yet, a budding trend in the co-working space came to the fore through our multiple interactions in the industry. Largely restricted to the business centres and premium serviced office.

In revenue sharing model, the property owner and the operator sign a joint venture wherein the former takes the maximum load of initial investments for fit outs while the latter takes up the responsibility of managing the operations. Thus, in this case, the owner and the operator work as business partners. Though, it completely depends upon the terms and conditions of the contract signed, it is usually the owner who gets the larger share of the profit earned as the initial capital is invested by him. Usually, small time co-working operators, who cannot take the load of investing huge capital upfront opt for a revenue-sharing model. The most important characteristic of such a model is that both partners benefit in case the business flourishes and both share the burden in case of a loss.

In owner-operator model, the owner of the property converts it into a co- working space himself and operates it on his own. However, in India, this model is not very common as most property owners either lack the expertise to operate a co-working space or are too big to get into such a business model. For instance, established developers such as DLF, have leased put properties to multiple co-working operators but are yet to venture into the business themselves. This is because they do not feel the need to diversify their business in this direction yet. In this model, the owner of the property converts it into a co-working space himself and operates it on his own. However, in India, this model is not very common as most property owners either lack the expertise to operate a co-working space or are too big to get into such a business model.

Co-working in India

According to the reports of ‘Let’s Co- Work India!’ brought out by QuikrRealty in alliance with HDFC (formerly HDFC Realty), “India has one the highest office space requirements in the world. The total annual office space absorption in India stood at around 41 million sq ft in 2017. On the other hand, the country is also experiencing growth in the number of startups and freelancer population. As per the report published by NASSCOM, India had around 4,200 startups in 2015, which is poised to grow by 2.2 per cent to reach 11,500 by 2020. Total funding received by Indian Tech Startup in 2017 was around 13 billion dollars.

“These statistics point towards a huge scope for the co-working industry. However, popularity of co-work spaces in India is comparatively recent. It was only during the early phase of the ongoing decade that the trend of co-working started catching up in India. Launched in 2013, 91Springboard was one of the earliest well known organised co-working space in India. Until then, the only well known shared office space provider was Regus, which rather than a coworking space was more focused on business centre and virtual office space services. While WeWork, the global industry leader opened up its first Indiacentre at Delhi in mid-2017 and is currently operational with around 16 centres across Mumbai, Gurgaon and Bengaluru.

“However, as the co-working industry has grown stronger, the unorganised sector has not just remained limited to restaurants. Today, residential apartments, bungalows, warehouses across Mumbai, NCR and Bengaluru are being converted to coworking spaces. Co-working spaces housed in apartments usually have very basic facilities and are priced lower. However, they have a captive market of their own. On the other hand, warehouse based co-working spaces get lot of spaces for innovative interiors and activity areas making them at par with the co-working spaces located in commercial buildings.”

Recently the WeCo, an American firm operating such co-working office spaces under the famous WeWork brand, has successfully achieved its robust revenue growth in the country. Although it is still reeling under massive losses on a global level, as per the reports of Reuters, it looks forward to raise 3-4 billion dollars through the initial public offering (IPO) once it launches in September. “We also plan to continue to enter into management agreements, as we have done in India, under which the building owner funds all capital expenditures to build out the space to design specifications and maintains full responsibility for the space, while we function as the manager and receive an agreed-upon management fee,” said the company while posting its filing that has earned 3.5 million dollars in management fees in the six months till 30 June. With its entry in India in 2016 through their partnership with the Bengaluru-based Embassy Group, WeWork has been able to expand its popularity. At present it has 23 co-working centres ~ nine in Mumbai and Bengaluru, and five in Gurugram, comprising 39,000 seats. On a global level, the company is present in 528 locations of 111 cities across 29 countries.

As per the info-graphic research by myhq regarding the future of the trend in India, by 2020, investments worth 400 million dollars are expected to be received, with 13 million people expected to work out of such spaces across India. While on a worldwide level, co-working space is expected to fully outgrow the traditional serviced offices, and that too to work on the ownership-based model, as the future of these spaces predicts moving away from lease-based model and adopt a more developed in partnership type structure with the land/property owner, developer and the space- provider. One can only wait to witness the growing popularity of co-working becoming a popular hallmark on a global level!