Co-working or flexible workspaces are growing at a scorching pace in India. There are over 300 operators and a recent report stated that flexible space operators were shifting focus towards leasing medium to large-sized spaces. Across cities, it's not just start-ups but also larger corporates that are opting for co-working spaces - nearly 50 per cent of the demand for many co-working operators is generated by corporates. So much so, that many anticipate flexible workspace industry to account for nearly 40 per cent of all annual commercial real estate absorption in another two years.
Why is India's co-working industry growing this fast? Harsh Lambah, Country Manager India at IWG; Karan Virwani, CWeO at WeWork India; Ritesh Malik, Founder of Innov8 Coworking; and Sandeep Sancheti, Vice Chancellor, SRM Institute of Science and Technology got together at Business Today's annual conclave, MindRush, in Mumbai on Friday, to underline many factors that are contributing towards this growth.
The millennial employee is at the heart of the trend. Virwani pointed out that corporates are now forced to focus on employee engagement and experience. "There is a fight for talent, and to retain them. Most companies have realised that millennials give importance to the culture and the environment they work in. Companies want to transform themselves for this talent. They want to create working environments that are super engaging. There is a complete shift in the mindset," he said.
There is another reason for the mindset shift. According to Malik, the shift is likely to have started post the Lehman Brothers' collapse, around 2009. "Now, there are micro-recessions happening every three years. There is a lot of contraction and expansion of workforce," he said. When companies can't predict demand, co-working becomes a boon. The co-working industry takes the pain of investing in capital expenditure and converts it into an operational expense.
Meanwhile, there has been a transformation in the work culture as well. Millennials want to work out of places that are closer to their homes. Most Indian cities are congested and people are placing a high priority on time.
FULL COVERAGE:MindRush 2019
Lambah stressed that co-working is not really a new concept - it is the latest trend in a 30-year journey. What is co-working today used to be business centres earlier. What differentiates co-working is the 'community' element. Flexible workspaces today organise events, link users over an app. In other words, make working more fun for the millennial.
There are many flavours of co-working. Most players offer flexible seats bordering on the Starbucks concept where the same desk is not assured every day. These seats, mostly used by gig workers, are also the cheapest. Then, there are fixed seats in sprawling, well designed open spaces that start-ups prefer, and finally, cabins for corporate customers, which are the costliest. Some co-working operators let out the entire floor to a large enterprise customer.
Large co-working operators prefer big enterprise customers as well because start-ups tend to have boom and bust cycles while enterprises are more stable and sign long-term agreements.