Market Trends of India Co-working Office Spaces Industry
Cost Optimization is Driving the Significant Growth in the Sector
In India, Coworking spaces are preferred mainly by startups for cost-effectiveness. Users only pay for what they use and rent, nothing extra; there are no hassles and spending on infrastructure maintenance and repair, which conventional offices include. Since startups function on limited capital initially, lower costs of performing work are in their favor. Companies not bound by long-term lease contracts with strict terms in a regularly changing economic environment will be better positioned. The Coworking Spaces offers flexible tariffs that can combine service packages, such as choosing precisely what suits users' needs. In case users need to reduce or, on the contrary, increase the project team, for example, if companies enter a period of rapid growth and need more employees, using Coworking spaces can always do it.
So, the companies' bottom lines are a crucial factor driving demand for coworking space. Based on locations nationwide, coworking offers a 12-72 percent cost reduction compared to traditional office space. The cost of traditional office space quickly adds up. In addition to lease payments, prices for conventional office space include utilities, internet, and tech support and maintenance. Conversely, utilities, internet, tech support, and maintenance are typically included in coworking memberships. Businesses of all sizes have caught on to the cost savings of shared workspace.
Increasing Number of Startups and Freelancers in the Country
The Coworking ecosystem, initially the go-to option for startups and freelancers, has become a prerequisite for SMEs. The biggest chunk of 10.3 million seats out of the total 12-16 million potential seats is ascribed to large companies. There is a qual divide of 1.5 million each among freelancers and SMEs.
In February 2023, the Government said the number of recognized startups had increased from 445 in 2016 to 86,713 in 2022. Under the Startup India initiative, as of June 2022, 72,993 have been recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). Under SISFS, as of June 2022, 703 startups have been provided with funds, while 428 startups have been approved for funding. According to the statement, the Government has established FFS with a corpus of INR 10,000 crore (USD 12 Billion)to meet startups' funding needs.
The smallest lot is formed by startups, at 100,000 seats. With a substantial shift from traditional offices to flexible workspaces attaining widespread acceptance, more and more SMEs are embracing coworking due to cost efficiency, flexibility, tech integrations, superior infrastructure, enhanced productivity, plug-and-play solutions, and networking opportunities. Thus, they can concentrate on their fundamental business minus the hassle of managing real estate.
