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Virtual offices, co-working can help entrepreneurs and start-ups save initial costs

Chandralekha Mukerji     January 28, 2014
While a freelancer or a small business owner can turn a garage or basement into an office, keeping up a professional appearance for clients is essential for some. If the traditional option of leasing a place is too expensive, a virtual office service could be an ideal solution for small businesses.

Virtual office service providers offer a recognisable business address that you can provide on business cards and letterheads, a phone number and an executive to handle calls and answer mails.

Other facilities include lounges, IT services for hassle-free operations and conference rooms available on a pay-per-use basis, with easy online or telephonic booking options. Service providers with a global presence often provide packages that include the option of using their international facilities as well.

{blurb}"Maintaining an office equates to high real estate costs, high manpower and training costs and administrative hassles, which is a big (cash) drain for a startup," says Taranviir Kaur, country head (India), Imperial Servcorp, a virtual office service provider.

"This need is met best by virtual offices, which ensure that you can run your business professionally and focus on your core business activities." Servcorp provides space in Mumbai and Hyderabad in India and 20 other countries worldwide.

The costs are, of course, much lower than maintaining a real office with similar facilities. For instance, you can have a virtual office in Mumbai's Bandra Kurla Complex for Rs 6,000 a month through Regus, another company that provides flexible workplace solutions. Renting an office in a business park in that area would otherwise cost you lakhs of rupees.

However, you have to lease the virtual space for at least a year, meaning you will have to pay a lump sum at the beginning of the term. The price of the virtual office packages varies in accordance with the address you choose. So, while a commercial address in Saket (Delhi) would cost you Rs 7,000 a month, a respectable space in Noida is available for Rs 4,500 per month.

There are international options available as well. So, if you have clients outside India or are expanding your base, an international virtual office solution can be a frugal option to test waters.

OnTrac Operations Management Solutions, a business that helps companies improve operational efficiency, chose a virtual office package when it expanded to Manila last year from its home base in India.

Vinay Kumar, country head, Philippines, OnTrac says: "Apart from cutting costs, the service has been particularly helpful as our international clients call on a local number that gets routed to India. We also use the virtual office as a central location to visit clients."

According to experts, the segment has huge growth potential and is expected to grow by up to 25% year-onyear. Sahil Verma, chief operating officer, Regus India, says the model is quite common in developed countries and is now being adopted here: "Domestic companies, especially start-up firms and SMEs (or small and medium enterprises), are opting for this model before expanding to a new market or city."

{quote}This is reflected in the expansion plans of virtual office service providers, who are no longer restricted to metros and plan to tap tier II and tier III markets.

Regus, who were till recently focussed on the major metros now offer services in growing cities such as Ahmedabad, Pune, Nagpur, Indore and have destinations such as Kochi, Lucknow, Jaipur and Chandigarh as places to expand to.

Another interesting concept that can help newbie entrepreneurs and start-ups save money and effort is co-working, or people from different, and often related, segments working out of a common office.

While shared offices are about sharing office resources, co-working offers a collaborative environment where people do their own thing but also network and offer each other their services.

"You learn the best practices by being exposed to the various tools others use around you and this gives start-ups, particularly small teams, a social place to work," says Nakul Mathur, director-India, Avanta, a serviced office and business infrastructure provider.

The costs of shared offices and co-working spaces are similar-between Rs 2,500 to Rs 8,000 per desk for a month, depending on the area and type of space. The difference is in the pooling of ideas and expertise.

Bala Menon, co-founder and CEO, DuckTile Innovation Labs, started his company in 2012 from a coworking space. The arrangement, he says, is very useful in finding quick help: "The beauty of co-working spaces is discovering familiar strangers, which is rare in an isolated corporate setting. We were looking for some help in marketing and found a suitable company within hours."

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