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A solution to save cost on your high real estate bills

Jan 29 2013, 14:51   |   By SME Mentor

Nikita Peer

Ajay Kriplani launched his own leather export business just four months ago. Yet, he has a spanking new office at Vibgyor Towers , one of those chrome-and-glass totems at the Bandra-Kurla Complex, Mumbai's prime commercial destination. Kripalani's office is a plush 225-sq-ft fit-out. It has the latest IT and other office facilities and a spectacular view too. No, his morning cup of coffee has never smelt better! And get this - this luxury costs Kripalani less than Rs 35,000 a month!

What his impressive business card doesn't reveal is that Kripalani operates out of a serviced office which he uses only when required - and he pays only for the number of days he uses it. Serviced offices, and their lesser cousins, virtual offices, are shared office spaces that offer a premium office address for your business card, access to top-class facilities and operate on the pay-per-use model. The cost of renting each varies with the location and facilities you sign up for.

Shared Office Spaces

A serviced office is a physical office space that offers the full range of services that any corporate office enjoys including a secretary, receptionist, infotech support, pantry and lounge. A virtual office, on the other hand, is not a physical space but is a service backed by business and administrative support such as telephone answering and call-forwarding facilities, fax facility and boardrooms for meetings. It varies from a basic plug-and-use business process hub to one that offers the full range of support services including a boardroom for meetings.

Who Needs Them?

Over the last few years, businesses have evolved to become increasingly flexible and less and less tethered to a physical office. Enter the shared office space, which is just perfect for people just setting up a business, a venture that is expanding to a new territory, companies that require off-site office space and also ventures with no long-term plans. Shared offices are also popular among young business executives, consultants and freelance specialists who are looking to move their businesses out of their homes, to the next level.

Catering to these entrepreneurs and ventures are service providers like DBS Business Centre and Apeejay Business Centre, the oldest players in this segment. Other prominent names include Regus, The Executive Centre, ServeCorp, Stylus, New Bridge Centre and Vatika Business Centre. According to Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India , "Serviced offices are a very strong sector in India and the growth potential is immense. They are especially active across the Tier 1 and Tier 2 cities."

Professional Image

In Mumbai, most serviced offices are located in commercial hubs such as Fort, Nariman Point, BKC and Andheri. Nikhil Shah, owner, Parshv Business Centre, says, "Start-ups usually operate out of home and don't require office space. But to grow their business, they need a professional image for their company. Signing up for a virtual office could cost as little as Rs 1,500 a month. Also, your phone never goes unanswered!"

Reducing Costs

Renting a shared office involves huge cost savings. Meenal Sinha, Country Head, Imperial Servcorp, explains, "In the serviced office space model, the client pays only for what they really need and end up saving upto 70 per cent. Entrepreneurs may not want to invest in infrastructure costs and hiring additional people to run the facility. Shared and centrally managed IT infrastructure, secretarial services and conference facilities result in significant cost reductions. Also, there is a lot of flexibility as the client can leave with a month's notice."

While renting a shared office in Andheri costs Rs 120 per sq ft per month, Parshv Business Centre charges Rs 48 per sq ft, which tots up to Rs 7,800 per cabin per month. Not a bad deal, considering you get an Internet connection, phone facility, mineral water, a reception area, refrigerator, furniture and stationary thrown in.

Tech Talk

Another huge plus is advanced tech facilities and support. "Servcorp clients were able to answer their office calls even during calamities because we re-route them through the nearest Servcorp location. We have also developed apps called Serv corp meetings for the iPhone, BlackBerry and Android, to make it convenient for young entrepreneurs to book their resources and control their office via their smart phones. This way, they can change the way their calls are answered and the numbers being transferred. And everything is updated in real time," explains Sinha. He adds that Servcorp has a dedicated IT team in their head office in Sydney and has invested US$ 50 million in technology.

The downside is you cannot customise a shared office space. And it does not count as an asset on your balance sheet. But that doesn't matter to the new breed of entrepreneurs or start-ups who are working to a whole new business paradigm.

You can send your feedback on smementor@moneycontrol.com or simply post comments below


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