Awfis stands out for its ‘ambience’ and ‘ease of doing business’.
As Amit Ramani was re-imagining what the workplace of the future would look like for large corporate clients in the US, he began noticing some of his clients moving their employees out of satellite offices and into shared workspaces.
While he didn’t see the shift as a threat to his own business Nelson, he did see an opportunity. If even large corporates were unwilling to pay hefty rents in cities such as New York, certainly large corporates in Mumbai, Delhi, Bengaluru and Chennai must feel the same way.
Being so up close and personal with this massive change between 2008 and 2014 in the US, Ramani decided that replicating a similar model in India could pay hefty rewards.
In April 2015 he founded Awfis, a start-up that would offer shared office space to individuals and companies in India.
Ramani says some part of the success Awfis has seen so far is because he was able to spot the trend of co-working quite early on in the US.
While certainly not the first player to enter the Indian market, the timing couldn’t have been better - in 2015, both start-ups and SMEs saw a massive surge thanks to both an influx of foreign funding and a push from the government.
“I think it was a very interesting time in the evolution of work itself. Co-working spaces are actually addressing some key problems - a start-up doesn’t have money, corporates have money but don’t want to spend on real estate and SMEs have realised that they need to be presentable,” said Ramani, founder and CEO of Awfis.
Unlike many of its competitors, Awfis did not go after just start-ups to fill seats at its centres. Instead it turned to SMEs and large corporates, giving it steady growth and a stable base of customers. From the beginning, Awfis was incubated out of The Three Sisters: Institutional Office (TTS:IO), the family office of YES Bank founder and Managing Director Rana Kapoor.
Today Awfis has 21 centres across eight cities and the space to seat 7,500 people. The company has pushed hard to get large corporates to use its service, winning clients such as ReNu Power which occupies 200 seats at one of its centres in Gurgaon.
While it’s hard to put a figure to the coworking sector in India owing to it still being highly fragmented, a few players such as Awfis, 91Springboard, BHIVE and even global majors such as WeWork have started gaining scale. Real estate consultancy JLL expects the space to receive $400 million in investments by 2018.
Awfis says growth is often outpaced by demand, ensuring that occupancy at all its centres is high and allowing each of its centres to break even in under 90 days. While Ramani says profitability has been a core focus right from the start, he isn’t able to put a timeline when the company will stop investing in growth.
“There are a lot of variables to that, we will have to see how the market is, what the competition is doing. But rest assured, if we stop investing in new centres we will become profitable very soon,” he adds.
With the price for a seat ranging all the way from Rs 3,000 to Rs 14,000, Awfis says it is 30 per cent cheaper and can vouch that the quality of its workplace will be 50 per cent better than if a company opted to have its own office. But Ramani agrees that coworking spaces can’t just be providers of on-demand real estate.
“Amit has a very strong understanding of the real estate sector but it’s not the only place his expertise lies. Co-working is more of building a value bridge where there are alliances, engagements and so many other things and from very early on being incubated in-house we knew this would be big,” says Radha Kapoor, who along with her two sisters oversees the running of TTS:IO.
The way forward
Ramani says while today coworking is disrupting the idea of the traditional workplace, in a few years it could become the de facto real estate offering for companies. “In that case in a few years coworking will be known as just working,” he adds.
For Awfis, moving towards that goal involves opening over 100 centres across the country, with the ability to seat 35,000 people at any given time. The firm is looking to get there in as little as 24 months and for this recently raised $20 million from Sequoia India.
|The co-working space market might double within two years|
The adoption of co-working spaces is still at a nascent stage and it is rapidly increasing within multiple customer segments - freelancers, start-ups, SMEs, professional services, etc. This makes is too early to predict the sector’s potential. For all we know, the current market might double within the next two years.
Awfis stands out for its ‘ambience’ and ‘ease of doing business’. For the tenant organisations at the growth stage, considering ad hoc requests and being flexible with lease plans/ work-space layouts/ amenities etc. serve as strong delight factors. Awfis tops that up with a friendly staff.
As the time lag for start-ups between setting up and funding is more in India (as compared to the global scenario), these co-working spaces will be perceived as supporting sustainability. As more of these co-working spaces offer flexible and affordable plans, a lot of movement will happen from start-ups currently using cafes in pursuit of better networking opportunities and ease of hiring employees.
Another trend that we might observe will be longer association of tenants and adoption by bigger firms.
With improved customer service, the benefit of hassle-free operations and low turnaround time for setting up teams in new geographies will emerge as strong value propositions.
Pawas Misra, Associate director at research and consulting firm RedSeer Consulting