Workplaces have changed, and how!
The ‘Shared economy’ syndrome has gripped almost every aspect of the business ecosystem, and even workplaces have been heavily influenced by this thought transition. It has reimagined the way we perceived our offices, grabbing the attention of start-ups and established enterprises alike who want to give the millennial workforce exactly what they seek. In India, between January-June last year, co-working firms registered almost 3X growth numbers, leasing 19lakh sq ft. compared to only 6.4 lakh sq ft. in the first half of 2017. The concept’s rising popularity, especially in an otherwise conventional economy such as India, stems from the fact that the country will have the world’s youngest workforce by 2020, and the transition needs to be made from protocols and stuffy cubicles to free and fun spaces for young professionals to stick around.
While already a new concept, the co-working segment is already evolving to become much bigger in its scope. The latest trend that is reimagining the sector completely is the gradual transition to premium serviced offices, a concept that has enhanced co-working’s value proposition immensely. At the heart of this new movement lies a singular, prominent factor-enhanced flexibility.
Flexibility 2.0 in co-working
Co-working initially became popular due to the greater degree of flexibility and cost efficiency it offered in terms of operations. With a seat/desk based revenue model, enterprises could just choose the number of seats they wanted to occupy in a space and the duration of occupation. The allied services, such as housekeeping, utilities, reception etc. were taken care of by the space providers, and sometimes, a coffee machine or two was thrown in! However, there was little scope for granular level personalization that could help enterprises distinguish their presence while working with other organizations under the same roof. This is where premium serviced offices come in.
These new space providers offer customization at a micro-level, starting from how a space is built to enterprise needs while scaling up or down. Premium serviced office space providers own the places they offer, hence have greater freedom to carry out alterations, whether temporary or permanent in nature. As Foreign Direct Investment in the Indian market grows, big foreign players are looking to outsource key processes rapidly, boosting the need for ready-to-move spaces.
Foreign players drive demand, outsource rapidly while maintaining brand identity
India is placed at the very top in the list of countries favoured for outsourcing globally, based on Financial Attractiveness, People Skills, and Availability, and Business Environment Scores. Iconic brands are making a beeline to India in order to make their presence felt at arguably the most promising economy out there. However, while they look to integrate, global enterprises also want to associate their India operations with the greater brand identity developed over the years. This is an amenity that they do not get in regular co-working spaces. Working in a uniform set-up ends up diluting the brand identity and culture, something that brands do not want to happen. With premium serviced spaces, they essentially get to build ‘intentional spaces’ which reflect the brand culture without involving significant rebuilding costs.
In fact, the office spaces industry is estimated to be the third largest outsourced industry after IT and BPO. This trend is easy to understand, considering premium office spaces offer international brands the ideal way to smoothly enter in new markets by testing the waters. They can control resource allocation as per the brand’s current positioning and strategy, and can easily incorporate larger teams as and when the need arises.
Other challenges solved
Acquiring an office space and managing it involves significant amount of expenditure. In today's hyper-competitive environment, businesses need to allocate limited resources smartly. As such, investing in the acquisition of office spaces can get valuable funds stuck. Even if an enterprise acquires a space, the long gestation period between acquisition and getting it work-ready discourages enterprises from adopting the ownership route. Rigid lease based operational models lock up the essential capital expenditure which could be otherwise utilized for growth purposes. Brands end up with a non-optimized workplace strategy wherein 40-60% of the space remains underutilized.
Premium serviced spaces offer a great alternative with flexible office lease structures and hassle free lock-in periods that do not block capex. Instead, it allows even bootstrapped start-ups to access all-equipped spaces that allow them to get off the ground in minimum time and costs. Moreover, there are no sunk costs that might be accrued with a change in the scale of operations. Additionally, the opportunity to network with other organizations and the chance to pool in resources to achieve business goals is a bonus every start-up would like to pounce on.
Cost-efficiency, customization to establish a distinct brand identity, operational flexibility, reduced management hassles and a cool work culture have made premium serviced spaces a separate, high potential segment emerging under the overarching co-working movement. There is more to a workspace than meets the eye, and premium serviced space providers allow enterprises to establish an independent personality, while simultaneously benefitting from the collective resource sharing opportunities typical of the current trend of collaborative consumption.
-- Mr Puneet Chandra, Co-founder of Skootr
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