Covid rescues coworking startups as firms look at hot-desking, 'flexible offices'

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The coronavirus outbreak that has wrecked the economy may come to the rescue of the coworking startups as companies look at flexible real estate plans to adjust to the new normal of rotational staff and hybrid offices without getting tied down by long-term contracts.

According to industry insiders, two factors are working in favour of co-working spaces. One, not all employees need to be in the office at the same time, hence few seats can work well for office on rotation. Hot desking is not new but is now being given a serious thought with a large chunk of employees working from home.

Second, not all companies will have the money to maintain large offices across the country. Even if headquarters are on a long lease, satellite or regional offices can be shared spaces, they said.

“We are currently operating in a complete work-from-home model but going forward, we are tying up with co-working spaces to take up 10 to 11 offices across Hyderabad, Rajasthan, Gurugram and other cities where staff will come to the office in a rotating fashion,” said Sreevathsa Prabhakar, chief executive officer, Servify, a device lifecycle management startup.

Also read: COVID-19 impact: Office leasing down by 60% in H1 2020

Talks are on

Top executives at coworking startups said discussions have just started across the tech industry and companies may start drawing up these contracts early next year. They are reaching out to founders and operation heads with flexible and innovative plans that suit these companies.

“Reduction in infrastructure cost and employee numbers along with prolonged work from home has created confidence of employees operating remotely or from home or from client locations if required,” said Prashant Singh, business head Teamlease Services, a job portal for blue-collar and entry-level employees.

Flexibility and customised offerings by coworking startups, too, had helped, he added.

Several startup founders in Bengaluru told Moneycontrol that they were getting cold mails from coworking platforms to evaluate these options once they start opening their offices.

A few of them have held preliminary talks as well. A couple of entrepreneurs confirmed that they would look at these options once offices restart, especially for their satellite offices.

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“There will be massive stress on this sector as a whole but the flexible leasing arrangements will see some growth,” said Shesh Rao Paplikar, chief executive officer, Bhive, a Bengaluru-based coworking startup.

Coworking spaces, currently, form a minuscule portion of the overall real estate business.

Bhive has launched two properties during the pandemic. While they are yet to sign up tenants, Paplikar is confident of deals starting to flow soon.

Also Read: Office leasing across top 7 cities drops 36% over last year due to COVID-19

Flexi plans may help

91Springboards has also started redesigning its plans, making them flexible, more accommodative for startups and tech companies.

The company that has close to a million square feet of shared workspace available across nine cities is seeing some interest in the market. While business is not back to pre-Covid levels, it has opened talks with founders.

“We are working on plans like the same price for properties across the country, that is a major shift for companies looking to manage a distributed workforce after Covid-19,” said V Shantakumar, senior strategy advisor at 91Springboards.

“Further with events going online, our customers can now log in from any location and attend our meetups and seminars, which makes physical presence redundant.”

Will 2021 be better?

Only a few sectors can continue working remotely for a long time but businesses like logistics, fintech and BPOs will have to get back to the office and coworking spaces are what they will need.

Paplikar said deal-making would be back by April 2021. “Business is starting to rethink around the hybrid workspace, remote offices, rotational staff, in those cases platforms like ours can be the best partners, where we can provide a lot of flexibility and benefits,” he added.

The pace, however, is slow as the industry closely watches the pandemic that continues unabated in India, with known infections coming close to a grim milestone of 6.4 million, including 99,773 deaths.

They were clinching some deals but occupancy was slow, Shantakumar said. For instance, if a business is taking up a 150-seat space, it is bringing in only 25 people in one go.

From investment deals being struck online to workforce getting distributed and the entire culture of an office space getting upended, Covid-19 has changed business forever. In the middle of all this, commercial real estate is staring at a bleak future. Now, it is up to these startups to innovate and remain relevant in a post-Covid world.