Serviced offices offer foreign firms setting up shop smooth transition

Serviced offices offer foreign firms setting up shop smooth transition
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First Published: Mon, Apr 23 2007. 01 15 AM IST

In demand: For companies entering India, business centres are a good alternative as these give them immediate space to work
In demand: For companies entering India, business centres are a good alternative as these give them immediate space to work
Updated: Mon, Apr 23 2007. 01 15 AM IST
Abhishek Khare, who heads Integreon’s area operations here, sees his temporary office space in Gurgaon as a kind of an extended-stay hotel.
The US-based knowledge process outsourcing company works from the Vatika business centre, one of a growing number of so-called “plug-and-play” serviced offices, which provide nearly everything companies need to operate—other than laptops.
Khare’s offices are furnished with brightly coloured cubicles, telephones, fax machines and printers. The centre’s staff members answer the phones, provide security, clean the offices, serve coffee and tea and operate the concierge desk.
“I think of it this way: until my house gets set up, it’s like I’m staying at the Marriott Residence Inn,” Khare said. “Someone is doing my dishes, laundry, I get food, but I’m living out of a suitcase.”
Khare said he’s willing to pay a premium for the services because he wants the transition to be comfortable while construction of Integreon’s new offices are completed across the street.
India’s booming economy has fuelled interest in business centres, which are popular with foreign companies setting up new operations in India.
Business centres can cost up to twice as much as traditional office space (from Rs15,000 to about Rs40,000 per seat per month in most major cities and up to Rs1.2 lakh per seat per month in Mumbai). But they also offer flexibility. Tenants don’t pay based on space they aren’t using because fees are often based on the number of employees or by the number of seats in an office, rather than by square foot.
The advantage is that a company can start with one or two employees and then scale up without committing to a long-term lease or a set amount of space. Companies also save time and money on set-up costs, said Madhusudan Thakur, country general manager for the UK-based Regus, which has 750 business centres worldwide and 13 across the country since it launched in India in 2005.
Several companies now specialize in business centres. Companies such as Regus, now the biggest player, the Bangalore-based NewBridge Office Business Centers and the Gurgaon-based Vatika Group are creating competition for established centres like the 17-year-old Paharpur Business Centre and Software Technology Incubator Park in Delhi and chains like DBS Corporate Services Pvt. Ltd, which opened its first business centre in Mumbai in 1982.
“For a start-up or a company making a new entrance in India, a business centre is a good alternative but also an expensive alternative,” said Vivek Dahiya, director of global property advisor DTZ. “A lot of companies entering India want immediate space to work in and lot of companies… are expanding very fast” and can’t predict their growth.
Genworth Financial Mortgage Guarantee India Pvt. Ltd’s country head moved into the Gurgaon Vatika business centre by himself late last year to start building his team and planning for permanent offices, said Taposhi Bose, the company’s manager, administration. “He was the first India head and he didn’t have time to look for offices,” Bose said. The centre served as his staff, “right from the piece of paper that needs to get printed to tea and coffee.”
But not all companies see business centres as temporary digs. Vasu Kumar, country manager for Advanced Semiconductors Inc., based in California, has been working from a DBS business centre for the past 12 years. The company’s other Indian employee works from a business centre in Bangalore. “We didn’t want any fixed overheads in the country,” Kumar said. “We didn’t want supporting staff and the hassle of having to take care of day-to-day operations… I’m a one-man show here. I travel a lot. When I leave the office behind, I don’t have to worry if the door is locked and the AC is shut off.”
Some business centres have started providing services to clients who work from home. Virtual tenants can have visiting cards printed up with the business centre’s address and a dedicated phone number that is answered by a receptionist. They can also receive faxes and mail at the office and confer with clients at the centre’s meeting rooms.
Shamsunder Aggarwal, chairman of DBS Corporate Services, said business centres are more popular than ever before. His centres in Mumbai, Hyderabad, Chennai, Kolkata, Bangalore and Delhi are 100% occupied. Rather than expanding, Aggarwal said he plans to upgrade his offices, which are between two and 25 years old.
Vatika Group has two 18,000 sq. ft centres in Gurgaon and is building two more in Hyderabad and Pune of 35,000 sq. ft each. It also plans to build in Jaipore, Chennai, Bangalore, Mumbai and Singapore. Regus has 13 centres in Delhi, Gurgaon, Mumbai, Kolkata, Bangalore and Pune and six other locations will soon come up, according to its website.
Gaurav Bhalla, director, operations and marketing, Vatika Group Ltd, said his business centre costs work out to about Rs140 per sq. ft, about twice the rents for regular offices. But that includes utilities, furniture and a host of services. “We operate as a hotel,” Bhalla said. “It’s no different.”
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First Published: Mon, Apr 23 2007. 01 15 AM IST
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