Whether you talk about the international markets or the national status, the co-working spaces are overcrowded now. There are at least 350 operators are conflicting for clients and there is an apprehension of consolidation among the companies.
If we talk in terms of growing one’s business, consolidation of one’s own business is quite good. However, with the co-working spaces, the consolidation of bigger businesses will put the survival of the small businesses at stake. It has been observed that a number of start-ups join the co-working space with their small team of employees with great enthusiasm but as they observe the fierce competition, they quit considering that, they do not have the bandwidth to compete with the bigger players.
Look at a few years back and you will be surprised to know that the co-working industry was quite unorganised and hardly people knew about it but today, it is one of the most developing sectors in India. The giants like IBM and TCS too have their small corners in these co-working spaces. 90% of the co-working spaces in Bengaluru are captured by a number of young companies and start-ups.
The city is feeling the saturation now but still many other co-working spaces are coming up. Now, experts are assuming that a number of large-scale operators will scale up their operations and edge out the small firms.
Out of the total office space in the city, 13% is covered by the co-working space and the co-working spaces have become a norm in today’s business world. The small businesses that do not want the headache of setting up an office from scratch to get a collaborative working environment with amenities such as internet, café, and chatbots and so on to run the business well.
Following are the shared experiences of some renowned companies:
- Harsh Lambah, the country head of International Workplace Group (IWG) says that umpteen major players entered the co-working space but backed off very soon. They thought it will be easier to survive, unfortunately, it was not. You need a strong background to scale up the business operations and the small players lack the frequency to do so.
IWG has 120 shared offices out of which, 114 are the business centers that are operated under the Regus brand and the rest of the six are co-working spaces under the ‘Spaces’ brand. The company is planned to double the network over the three to four years. Lambah believes that the consolidation will happen by acquiring larger firms.
- Abhishek Goenka, the CFO of Cowrks, a Bengaluru based company said that 40-50% of the office leasing space would be converted to co-working spaces. However, he further added that creating co-working spaces is not an easy task. It needs strong design, community building elements, customer service, and the right technology. Cowrks itself is a unit of a realty firm RNZ that is planning to expand its 14,000 seats to double its capacity by the end of March 2019.
- Karan Virwani, the India head of WeWork agreed to consolidation and said that scaling up the business is required for the growth of the business. He further said that this business is capital-oriented and highly customer-centric. From the outside, it seems glamorous but it is difficult to operate. Hospitality and retail are present at its core and there are no thumb rules to run this business. According to him, some of the factors that have fostered the growth of co-working spaces are the flexibility to scale the business up and down, reduced legal compliances, hassle free dealings with clients, ease of transaction and so on.
- The national director of Knight Frank India, Viral Desai said that the financial ability, customer service, ability to survive competition would segregate the competent players from the rest of the market.
If we try to add what these personalities stated then we would come up with a few pointers such as the financial ability, customer service and the right competence will lead the consolidation of this market. Even the traditional office spaces have seen consolidation in the past few years where only 5-6 players are holding the majority of the business centres. The co-working space is going to follow the same path.
So, what is required on the part of the co-working companies to survive? Financial ability is one thing but the companies should be ready to face and fight with whatever they encounter. The companies should maintain a healthy relationship with the customers and create a lasting impression in the minds of the customer that we call – Brand. Maintain your brand name and improve your bandwidth to run your business, consolidation will prove to be on a positive side for you.